External Debt and Economic Growth in Ethiopia
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Date
2002-07
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Addis Ababa University
Abstract
This study uses a simultaneous equation approach to investigate the impact of external debt on economic growth in Ethiopia using a macroeconometric model estimated for 1970-2000. The empirical findings reveal that external debt does not affect growth directly. The results indicate that external debt affects investment positively and is statistically significantly indicating external debt in Ethiopian case encourage investment rather than depress it.
Furthermore, the result also confirms that there is no sign of crowding out effect through which external debt is hypothesized to affect growth.
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Keywords
Debt and Economic Growth