Public Debt and Economic Growth: A Scissor Effect in Developing Countries? The Case of Gabon

Bidzo, Médard Mengue

doi:10.4236/me.2018.910106

Cited by 8 publications

(5 citation statements)

References 41 publications

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“…The study provided some insight on how the potential benefits of debt have been curtailed in most African countries due to misappropriation of resources. Bidzo (2018) further demonstrated that external over-borrowing impacted negatively on economic growth in the Gabonese economy. The study used GMM model to produce results that revealed considerable deterioration in economic growth due to increase in external debt.…”

Section: External Debt and The Economymentioning

confidence: 96%

External debt vulnerability in developing countries: the economic and policy perspectives

Edo,

Oigiangbe

2024

JFEP

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Purpose The purpose of this study is to empirically investigate how external debt vulnerability has affected the economy of emerging countries over time, with particular reference to Sub-Saharan African countries. It also deals with the policy issues associated with the economic effects. Design/methodology/approach The techniques of dynamic ordinary least squares and fully modified ordinary least squares are used in this investigation, covering the period 1990–2022. A panel of 43 Sub-Saharan African countries is used in the study. Findings The estimation results reveal that external debt vulnerability impacted negatively on economic growth, thus validating the concerns raised about the debt problem in Sub-Saharan Africa. Furthermore, the results revealed that domestic credit and openness of economy played a passive role and were therefore unable to cushion the adverse effect of debt vulnerability. Capital stock, however, stands out as the only variable that played a significant positive role in facilitating economic growth. The results are considered to be highly reliable for short-term forecast of economic growth and formulation of relevant policies. Originality/value Over the years, economic analysts and stakeholders have expressed concern about the inadequate ratio of foreign reserves to external debt in developing countries. The effect of this external debt vulnerability on the economy of these countries has yet to be given sufficient attention by researchers. In view of this perceived void, this current study is carried out to determine the economic and policy consequences of the problem.

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Section: External Debt and The Economymentioning

confidence: 96%

External debt vulnerability in developing countries: the economic and policy perspectives

Edo,

Oigiangbe

2024

JFEP

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“…The study provided some insight into how the benefits of sovereign debt have been short-lived in most African countries, due to the misappropriation of resources. Bidzo (2018) further demonstrated that public over-borrowing impacted negatively on economic growth in the Gabonese economy. The GMM model was employed to produce the result, which showed that an increase in public debt led to considerable deterioration in economic activities.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The direct favourable effect of domestic public debt, and the direct adverse effect of foreign public debt, align partially with the findings of some studies that reported only the positive or negative impact of sovereign debt. These studies include Ssempala et al (2020), Bidzo (2018) and Asteriou et al (2021). However, SSA countries may need to reverse the negative impact of foreign public debt on economic growth, by ensuring that the external debt burden does not exceed the IMF/World Bank prescribed optimum level of 30% (IMF, 2018).…”

Section: The Implications Of Studymentioning

confidence: 99%

Comparative Performance of Trade Openness and Sovereign Debt Accumulation in Fostering Economic Growth of Sub-Saharan African Countries

Edo

2023

Foreign Trade Review

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In the last four decades, sub-Saharan African countries have witnessed a substantial increase in trade openness and sovereign debt (foreign public debt and domestic public debt). The direct and interactive effects of these factors on economic growth are investigated in this study. The investigation covers the period 1980–2020 and employs the generalised method of moment methodology. The estimation results reveal that the direct effect of trade openness and domestic public debt is significantly favourable. The direct effect of foreign public debt is, however, found to be unfavourable. The results also reveal that the interactive effect of trade openness and domestic public debt is significantly favourable, whereas the interactive effect of trade openness and foreign public debt is fairly favourable. The estimation results thus imply that trade openness and sovereign debt are complementary drivers of economic growth in sub-Saharan African countries. In spite of the favourable role of trade openness and sovereign debt, economic growth has yet to achieve the desired level, which does not augur well for employment and welfare. The prospects of growth could be enhanced by strengthening the impact of trade openness and sovereign debt. However, policy makers should be aware of the direct negative impact of foreign public debt on economic growth, and the need to put measures in place to manage it. JEL Codes: F23, H63, F43, O55

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“…3) Gabon also records a high level of public debt denominated in foreign currency for more than a decade (Bidzo, 2018). Under these conditions, fiscal devaluation would be an interesting economic policy tool, since it is a budget-neutral measure and therefore prevents the increase of the public debt.…”

Section: Introductionmentioning

confidence: 99%

The Hypothesis of Fiscal Devaluation in Developing Countries: The Case of Gabon

Bidzo¹

2019

AEF

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In the absence of adjustment by exchange rates, it is suggested that the effects of a devaluation of the exchange rate through taxation be produced.The purpose of our study is thus to examine the plausibility of such an option in developing countries participating in a monetary union. From a normative perspective, we proceed to an empirical highlighting of the mechanism of classic fiscal devaluation, thanks to the estimation of a model with threshold effects on the data of the Gabonese economy.As a result, the option of fiscal devaluation is conceivable for Gabon. But, its effects would be small.

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Public Debt and Economic Growth: A Scissor Effect in Developing Countries? The Case of Gabon

Cited by 8 publications

References 41 publications

External debt vulnerability in developing countries: the economic and policy perspectives

External debt vulnerability in developing countries: the economic and policy perspectives

Comparative Performance of Trade Openness and Sovereign Debt Accumulation in Fostering Economic Growth of Sub-Saharan African Countries

The Hypothesis of Fiscal Devaluation in Developing Countries: The Case of Gabon

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