Debt Relief and Governance Quality in Developing Countries

Andreas Freytag () and Gernot Pehnelt

World Development, 2009, vol. 37, issue 1, 62-80

Abstract: Summary In this paper we empirically discuss whether or not debt relief has been economically rational in the past 15 years. From analyzing the determinants of debt relief, our results suggest that governance quality did not play a role in the decision of creditor countries to forgive debt in the 1990s. Furthermore, even the actual debt burden of highly indebted poor countries was not crucial in deciding whether or not debt forgiveness was granted. Rather, debt relief followed a strong path dependence: those countries whose debt had been forgiven in the first half of the 1990s were also granted debt forgiveness in the second half of the decade. However, this allocation pattern changed at the beginning of the 21st century, when path dependence diminished and some dimensions of governance quality were taken into account by donor countries.

Keywords: debt; relief; HIPC; development; governance; institutions; developing; countries (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0305-750X(08)00129-0
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:37:y:2009:i:1:p:62-80

Access Statistics for this article

World Development is currently edited by O. T. Coomes

More articles in World Development from Elsevier
Bibliographic data for series maintained by Catherine Liu ().