Economics at your fingertips  

External Debt and Economic Growth: Two-Step System GMM Evidence for Sub-Saharan Africa Countries

Shuffield Asafo, Adelajda Matuka and Nyendu Dominic
Additional contact information
Adelajda Matuka: Department of Economics and Law University of Macerata, Italy
Nyendu Dominic: Department of Economics and Law University of Cassino, Italy

International Journal of Business, Economics and Management, 2019, vol. 6, issue 1, 39-48

Abstract: This paper examines external debt and economic growth relationship in a panel of 48 Sub-Saharan Africa countries (SSA) for the period 1990-2017 using a two-step system General Method of Moments (GMM) technique. Our study shows that contemporaneously, external debt has a negative and statistically significant impact on GDP growth. However, the first lag of external debt variables stimulates GDP growth. The implication is that external debt accumulated in the previous period makes funds available for growth enhancing expenditure in the next period. Furthermore, our study found no evidence of a non-linear relationship between debt and economic growth. Lastly, we found that the deleterious impact of external debt on GDP growth does not preclude poor or rich SSA countries. We recommend the adoption of state-of-the-art measures in collecting domestic revenue to complement external revenue sources. In addition, we advocate for strong macroeconomic environment in SSA so that yield negotiation on the debt will not dissipate the coffers of SSA countries via high debt servicing cost.

Keywords: External debt; Economic growth; Panel data models; System GMM; Instrumental variables estimation; Econometric software. (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) (application/pdf) (text/html)

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:

DOI: 10.18488/journal.62.2019.61.39.48

Access Statistics for this article

International Journal of Business, Economics and Management is currently edited by Sanele Phillip (Editorial Office)

More articles in International Journal of Business, Economics and Management from Conscientia Beam 2637 E Atlantic Blvd #43110 Pompano Beach, FL 33062, USA.
Bibliographic data for series maintained by Editorial Office ().

Page updated 2021-04-20
Handle: RePEc:pkp:ijobem:2019:p:39-48