A Critical Review of External Debt and Economic Growth Relationship: A Lesson for Indebtedness Countries

Erdal Karagol

Ege Academic Review, 2004, vol. 4, issue 1, 69-78

Abstract: The purpose of this paper is to review existing empirical studies of external debt and economic growth relationship. The decline in investment and growth performance of the highly indebted countries in the past three decades is frequently attributed, at least to some extent, to the burden of their foreign debt, a phenomenon which has been recognised as debt overhang. Empirical results indicate that it is difficult to say whether external debt has a negative or positive effect on economic growth. It is also improper to make any type of generalizations of the potential relationship between economic growth and external debt. Thus, it is necessary to consider the case of each country separately.

JEL-codes: F34 (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:ege:journl:v:4:y:2004:i:1:p:69-78

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