External Debt and Economic Growth: The Case of Emerging Economy

Sami Al Kharusi () and Mbah Stella Ada ()
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Sami Al Kharusi: Sultan Qaboos University, Postal: Oman
Mbah Stella Ada: Department of Economics and Development Studies, Federal University, Postal: Ekiti State, Nigeria,

Journal of Economic Integration, 2018, vol. 33, issue 1, 1141-1157

Abstract: This study investigated the relationship between government external borrowing and economic growth, prompted by continuous increases in Oman’s external debt to finance its annual budget. Time series data for the period 1990~2015 were collected from the World Bank and the Central Bank of Oman. The study employed the Autoregressive Distributed Lag cointegration approach explain the error correction mechanism to ascertain the short-run dynamic nature of external debt and economic growth. Consistent with some existing empirical evidence, the study reveals a negative and significant influence of external debt on economic growth in Oman. Further, gross fixed capital was found to be positively significant in determining growth performance in Oman. The study, therefore, recommends a more productive use of the external debt fund in order to affect positive growth.

Keywords: Economic Growth; External Debt; Government Investment; Oman; Public Investment (search for similar items in EconPapers)
JEL-codes: C32 E51 F43 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (29)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0745

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