A structural analysis of external debt and economic growth: some evidence from selected countries in Asia and the Pacific

Abstract:This paper explores the effect of military expenditures on external debt in case of Pakistan over the period of . For this purpose, ARDL bounds testing approach is used to examine cointegration between the variables. ADF, P-P and ADF-GLS, Clemente et al. (1998) unit root tests are applied to check the order of integration of variables. OLS and ECM regressions approaches are employed to investigate marginal impact of military spending on external debt in long and short run.Our findings indicate cointegration which confirms long run relationship between military expenditures, external debt, economic growth and investment. The results reveal that a rise in military expenditures increases the stock of external debt. The inverse effect of economic growth on external debt is found and an increase in investment is also increasing external debt in the country. This study invites policy makers to approach the problem of curtailing external debt in innovative ways in case of Pakistan.

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“…After finding the existence of long run relationship between the variables, an error correction representation can be developed as follows 7 : …”

Section: II Ardl Bounds Testing Approach For Cointegrationmentioning

confidence: 99%

Does Military Spending Explode External Debt in Pakistan?

Shahbaz

Shabbir

Butt

2013

Defence and Peace Economics

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“…However, the results of empirical research by Chowdhury (1994), Elbadawi, Benno, and Njuguna (1996);Fosu (1999), and Pattillo, Poirson and Ricci (2004), among others, reveal that there is no evidence supporting the negative linkage between public debt servicing and growth in studied countries. These contradictory results indicate that there are some systematic variations in the cost of public debt servicing across countries, varying also over time.…”

Section: Introductionmentioning

confidence: 85%

An Analysis of Public Debt Servicing in Zambia: Trends, Reforms and Challenges

Saungweme¹,

Odhiambo²

2018

Croatian International Relations Review

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“…London and Paris clubs are avoided, the country moved to taken loans from Multinational financial institutions, as before 2006 the share of these institution was below 20% but increased to over 80% in 2007 and as high as over 90% in 2010 while loans from other sources as grew significantly to 29% in 2012 and loans from the multinationals taking the remaining [22]. The rise in loans from these Multinationals posed a great threat to economic independence of Nigeria as incidence of economic imperialism are usually observed when a country rely on loans from these institutions, as the effect of structural adjustment programmes stiil live with us.…”

Section: Nigeria Economic and External Debts Discussionmentioning

confidence: 99%

External Debts and Economic Growth in Nigeria: An Empirical Study Using Autoregressive Distributed Lag Model

Os¹,

Ts²

2016

Bus Eco J

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This paper models some economic theories which explained the casual relationship between accumulated funds/ loans from external sources (external debts) and economic growth with a more focus on Nigerian economy, as it is a usually trend for debts of third world and developing countries debts profile to be high, and this case is also the same with Nigeria as the country debts profile is on the increase once more after the debt cancellation of 2005 by the Paris Club of creditors. Also in the innovation by this study is the used of the Autoregressive Distributed Lag (ADL) model to capture the effect of externals debts on viability and growth Nigerian economy from 1984-2012. The preliminary and normality tests shows that the variables are positively skewed but are not normally distributes, while the econometric tests of Stationarity (Unit Root Test) and Co-integration Tests conform that all the variables exhibit Stationarity at first differenced and the existence of long-run relationship between the variables was also confirmed by the Johansen Cointegration test carried out. The result from the ordinary least squares method used confirms the existence of a dual behaviour as the lag 1 of external debts has positive while external debts of present year posed a negative effect on the performance of the economy. The recommendations are Nigeria government should ensure that debts incurred are channel towards productive uses and debt management office of the government should strengthen its plans and foster appropriate use of loans in the critical area the need for is identified.

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A structural analysis of external debt and economic growth: some evidence from selected countries in Asia and the Pacific

Cited by 41 publications

References 13 publications

Does Military Spending Explode External Debt in Pakistan?

Does Military Spending Explode External Debt in Pakistan?

An Analysis of Public Debt Servicing in Zambia: Trends, Reforms and Challenges

External Debts and Economic Growth in Nigeria: An Empirical Study Using Autoregressive Distributed Lag Model

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