External debt's impact on capital formation in lower-middle-income countries in Africa: ARDL approach

بشرى غالي, شرين

doi:10.21608/jocu.2023.157682.1215

External debt's impact on capital formation in lower-middle-income countries in Africa: ARDL approach

نوع المستند : مقالات سیاسیة واقتصادیة

المؤلف

شرين بشرى غالي

أکاديمية السادات للعلوم الادارية

10.21608/jocu.2023.157682.1215

المستخلص

In most African nations, capital is among the most significant impediments to long-term growth, necessitating a constant level of capital formation, the preponderance of which is financed by government debt. Emerging economies have utilized external debt to encourage domestic investment, however, several of the world's most indebted emerging economies failed to direct these debts to capital formation. As a result, while excessive debt is criticized for stifling economic growth, the majority of emerging nations cannot thrive without borrowing. As a consequence, this study intends to explore the impacts of external debt in the short and long-term on capital formation in Africa's lower-middle-income countries from 2000 to 2020 as no studies have been identified to quantify this impact on such nations. The “dynamic fixed effect DFE and pooled mean group PMG ARDL” techniques are used. The presence of a statistically significant and negative error correction term indicates the presence of a long-run connection. In this study, the PMG estimator is shown to be more effective and consistent. The results show in general that external debts have an insignificant negative impact on capital formation both in the short and long-term except for Egypt and Benin, which have a short-term positive impact on capital formation.

الكلمات الرئيسية