The Role of External Debt on Economic Growth: Evidence from Mauritania

Mahmoud, Limam Ould Mohamed

doi:10.4172/2162-6359.1000240

Cited by 8 publications

(9 citation statements)

References 8 publications

(9 reference statements)

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“…This result supports the findings of numerous scholars (Dinca & Dinca, 2013;Panizza & Presbitero, 2014;Shahzad et al, 2014;Zouhaier & Fatima, 2014;AL-Refai, 2015;Eberhardt & Presbitero, 2015;Halima, 2015;Munzara, 2015;Senadza, Fiagbe & Quartey, 2017;AL-Kharusi & Mbah, 2018) that external debt has a significant negative influence on a nation's economic growth and investments. However, this result conflicts with the findings of (Abuzaid, 2011;Shehu & Aliyu, 2014;Zaman & Arslan, 2014;Mahmoud, 2015;Odubuasi et al, 2018). Similarly, DTS t-statistic is 5.657 while the p-value is 0.000 < 0.05.…”

Section: Test Of Hypothesescontrasting

confidence: 58%

“…Borrowing for economic development and execution of capital projects is common among unindustrialized countries. Foreign loans are usually acquired to finance public investments required to unlock economic growth opportunities of a nation (Mahmoud, 2015). Shehu and Aliyu (2014) opine that countries borrow for macroeconomic reasons, which involves financing of capital investment, higher consumption and improvement of budget deficit.…”

Section: Introductionmentioning

confidence: 99%

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External Debt Financing and Public Capital Investment in Nigeria: A Critical Evaluation

Omodero¹

2019

Economics and Business

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This study considers the consequences of external loan on capital investment in Nigeria. Data for the study have been collected from the World Bank and Central Bank of Nigeria Statistical Bulletin, 2018 edition. The variables on which data are sourced include government capital expenditure, external debt accumulation, debt servicing cost, inflation rate, and exchange rate. Government capital expenditure is the dependent variable, while external debt accumulation and debt servicing cost are the key independent variables. Inflation and exchange rates are used as the moderating variables. The scope of the study covers the period from 1996 to 2018 and the data are analysed using the ordinary least squares multiple regression method. The regression results indicate that external debt has a significant negative impact on capital investment while debt servicing cost has a strong and significant positive effect on capital investment. Under this circumstance, the controlling variables are not significant in influencing capital investment. Hence, the study suggests more focus on profitable capital investments if external borrowing must be embarked upon. The need for the development of untapped natural resources, establishment of industries and revival of abandoned industries to boost debt repayment has been emphasized. The study also strongly recommends that the existing governments (state and federal) should endeavour to complete capital projects of past administrations in order to drive the economy and to avoid wastage of financial resources including the borrowed funds.

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Section: Test Of Hypothesescontrasting

confidence: 58%

Section: Introductionmentioning

confidence: 99%

External Debt Financing and Public Capital Investment in Nigeria: A Critical Evaluation

Omodero¹

2019

Economics and Business

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“…The debt should be used for activities that drive the economy. The study from Mohamed Mahmoud (2015) found that GDP and external debt has a positive relationship. But, Al Kharusi & Ada (2018) and Shkolnyk & Koilo (2018) found a negative relationship between GDP and external debt.…”

Section: Causality Test (Granger Causality)mentioning

confidence: 98%

Causality Between Gross Domestic Product, Exports, Imports, Foreign Exchange Reserves, and Foreign Debt in Indonesia

Syukri

2020

JDE

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This research aims to determine the relationship between gross domestic product, exports, imports, foreign exchange reserves, and foreign debt in Indonesia from 1978 – 2018. As a developed country, Indonesia must know the interrelatedness between the GDP and the variable in the international balance of payment to move the economy well. This research using the Vector Autoregression (VAR) method that includes ADF Test, Granger Causality, Johanssen Co-integration, Vector Error Correction Model (VECM), and forecasting with Impulse Response Function (IRF) and Variance Decomposition (VD). From the Granger causality test results that have been carried out among the five variables, it is concluded that there is no causality relationship, but there are six one-way relationships. Simultaneously, the cointegration test from the Johanssen Co-Integration test results in the five variables tested. Forecasting for the next ten years through the IRF and VD tests shows that GDP positively responds to foreign debt and exports. Exports provide a positive response to GDP and imports. Imports give a positive response to exports, GDP, and foreign exchange reserves. At the same time, foreign debt gives a positive reaction to GDP and imports. Then foreign exchange reserves provide a positive response to exports and foreign debt. The government needs to allocate funds from foreign debt to the export sectors to increase GDP. Keywords: Causality, VECM, Gross Domestic Product, Exports, Foreign Debt Java IndustryJEL Classification: F14, F41, C01

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“…The study found that the accumulation of external debt had a negative impact on both economic growth and private investment. Mahmoud (2015) analyzed 30 years of data, ranging from 1997 to 2005, to study the relationship between external debt and economic growth in the Mauritanian economy. The study used OLS regression and Johansen's co-integration analysis and found a negative relationship between the two variables.…”

Section: Literature Reviewmentioning

confidence: 99%

Interactions of Gross Domestic Product, External Debt and Government Expenditure: Evidence From International Development Association Countries [A Panel-VAR Approach]

Baral¹

2023

IJEF

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The study employed a Panel Vector Autoregressive (PVAR) model to examine the relationships among three macroeconomic variables- Gross Domestic Product, Total External Debt Stocks, and Gross National Expenditure - in International Development Association (IDA) member countries. Data from three different time frames - 1991-2019 (29 countries), 1994-2018 (35 countries), and 2008-2018 (39 countries) – was analyzed, and the lags of endogenous variables were used as instruments to address endogeneity issues in the dynamic model. The variables were transformed into growth rates to ensure stationarity and were estimated using the Generalized Method of Moments (GMM). The results were reported after removing both panel-specific and time-specific fixed effects. The study found a positive relationship between Total External Debt Stocks growth and Gross Domestic Product growth, which became more significant with the increase in the sample timeframe. The findings showed that a 100% increase in Total External Debt growth would lead to a 4-7% increase in Gross Domestic Product growth. The positive relationship was confirmed by the transmission of shocks from Total External Debt growth to Gross Domestic Product growth, but it lasted only for two periods and quickly returned to an equilibrium state. The relationship between Gross National Expenditure growth and the other variables was not conclusively established due to its lack of consistent and stable behavior with the other variables. The Stata package “pvar” was employed for data analysis and inferential conclusions.

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The Role of External Debt on Economic Growth: Evidence from Mauritania

Cited by 8 publications

References 8 publications

External Debt Financing and Public Capital Investment in Nigeria: A Critical Evaluation

External Debt Financing and Public Capital Investment in Nigeria: A Critical Evaluation

Causality Between Gross Domestic Product, Exports, Imports, Foreign Exchange Reserves, and Foreign Debt in Indonesia

Interactions of Gross Domestic Product, External Debt and Government Expenditure: Evidence From International Development Association Countries [A Panel-VAR Approach]

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