External Debt and Economic Growth Nexus in Sub-Saharan Africa: the Role of Institutional Quality
Journal Title: Journal of Economics, Finance and Management Studies - Year 2024, Vol 7, Issue 06
Abstract
Sub-Saharan African (SSA) countries have recently embarked on an economic growth trajectory which is characterized by ambitious national development aspirations. The ability of the SSA economies to generate sufficient domestic revenues to spur their desired economic growth is limited resulting into fiscal deficits. External Debt has provided alternatives to the fiscal deficits prevalent in SSA economies. Dividends from external debt investments have been unevenly witnessed among the SSA countries. Regions with better institutional quality continue to reap considerable dividends from external debt investments while SSA economies continue to accumulate external debt with sluggish economic performance. This study made use of the Generalized Method of Moments (GMM) to examine the role played by institutional quality on the nexus between external debt and economic growth on a panel of 28 SSA countries over the period 2005 - 2021. Empirical results indicate that institutional quality influences a positive and significant relation between external debt and economic growth. Policy makers in SSA countries should therefore strive to improve on institutional quality in regard to external debt management in order to reap more economic benefits from external debt
Authors and Affiliations
R. Mugobera , D. Mahebe
Keywords
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- EP ID EP737901
- DOI 10.47191/jefms/v7-i6-39
- Views 34
- Downloads 0
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