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Title: The effect of external debt on economic growth in Sub – saharan Africa
???metadata.dc.contributor.*???: Kidist Gebreselasie(Dr)
Mahlet, kassaye
Keywords: Debt cancellation, Economic growth, External Debt
Issue Date: Jul-2017
Publisher: AAU
Abstract: The effect of external debt on economic growth continuous to be a debatable issue among scholars, policy makers and advocates. This study examines the impact of excessive debt accumulation on economic growth in the heavily indebted poor countries (HIPC) found in Sub – Saharan Africa (SSA) during the period (1996 – 2015) using two – step GMM estimation technique. It also assesses weather the debt cancellations under the HIPC initiative contributes for growth in SSA. Results show that excessive external debt accumulation is adversely affecting the growth rate of per capita GDP possibly through its overhang and crowding out effects, whereas debt forgiveness under the HIPC initiative is found to have a significant and positive effect on the growth rate of per capita GDP in SSA. Debt coming as a package with a relief initiative can positively contribute to growth in HIPC - SSA. In other words, if debt is to benefit SSA, it should be accompanied by cancellation which is uncertain since it is a decision in the hands of the creditors.
Appears in Collections:African Studies

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