The Impact of External Debt on Economic Growth: Evidence from Southern Africa

Chilombo Stephania Mumba^1, and Jiang Hong Li¹

¹School of Finance and Economics, Jiangsu University, Jiangsu Province, Zhenjiang P.R. China

Cite this paper:
Chilombo Stephania Mumba and Jiang Hong Li. The Impact of External Debt on Economic Growth: Evidence from Southern Africa. Journal of Finance and Economics. 2020; 8(3):135-141. doi: 10.12691/jfe-8-3-6

Abstract

An ARDL panel model is implored to explore the relationship between external debt and economic growth in 9 Southern African countries over the period 2000-2018. The empirical results show that short term external debt negatively affects economic growth over the long haul just as in the short run while long term external debt shows a negative connection with economic growth for the short run and a negative significant connection among debt and economic growth over the long haul insinuating the external funds gained are not being utilized for economic activities such as investment, capital formulation and technology. These discoveries demonstrate the requirement for policymakers in Southern Africa to not exclusively depend on external debt as a means to stimulate economic growth but should utilize aggressive techniques to improve and advance their economies.

Keywords:
ARDL economic growth external debt GDP Southern Africa

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