Correlation between reforms and foreign debt in transition countries

Abstract

After the global economic crisis escalated, transition countries indicated growth in their external debt. The aim of the paper is to determine the existence of a correlation between the transition reforms and the level of external debt. The research is based on applied Mann-Whitney U Test on a sample of 27 transition countries. Transition countries are divided into two groups depending on whether their value of the average transition indicator in 2012 is greater or less than 3.4. The research has shown a positive and statistically significant correlation between the observed variables, i.e. that countries with higher average transition indicator have a greater external indebtedness. The regression analysis has found a positive and statistically significant correlation between the observed variables in the case of Serbia that enters the zone of high indebtedness. The research findings indicate the need to review the efficiency of existing economic policies as well as to define new direction of development that would provide the impetus to the economic growth of transition countries without additional external debt.

Key forecasts and prospects for green transition in the region of Central Asia beyond 2022

“…Individually, the major investors were China, the Russian Federation (the biggest investor in the period 2019-2021 followed by China) and the European Union [32]. The decrease in FDI inflows was evident during the global economic crisis [33], but the negative effects of the global economic crisis were far more pronounced in countries that were more advanced in implementing transitional reforms [34]. Since 2010, Uzbekistan and Turkmenistan have relied mostly on China as an investor in the extractive sectors, because China is the main importer of gas from these countries.…”

Foreign Trade Commodity Exchange Between the Countries of the Former SFRY

“…Since foreign direct investments (FDI) were still absent, the countries had a problem with the deficit of the balance of payments, which led to the growth of foreign borrowing and the consumption of foreign exchange reserves (Kovačević 2002). The lack of savings and foreign exchange increased the need for external sources, which further increased the external debt (Filipović, Raspopović and Tošković 2015), which in 1991 was the highest in Serbia and Montenegro (USD 5,501 million), Croatia (USD 2,164 million), Bosnia and Herzegovina (USD 1,925 million), Slovenia (USD 1,765 million), and FYR Macedonia (USD 850 million) (Cvikl and Mrak 1996).…”