Table 1.

Summary of selected empirical studies on external debt

AuthorsCountriesStudy periodMethodologyMain finding
Kharusi and Ada (2018) Oman1990–2015ARDL approachNegative and significant influence of external debt on economic growth
Korkmaz (2015)Turkey2003:01–2014:03VARExternal debt was found unidirectional causality from economic growth
Ramzan and Ahmad (2014) Pakistan1970–2009ARDL approachExternal debt has a negative impact on growth and considering the external debt composition, it is the bilateral part of the total external debt that retards growth
Ali and Mustafa (2012) Pakistan1970–2010Vector error correction modellingExternal debt exerts a negative impact on economic growth; clearly indicate that higher external debt discourages economic growth
Atique and Malik (2012) Pakistan1980 – 2010Ordinary least squares (OLS)External debt amount slows down economic growth more as compared to domestic debt amount and mentioned debt servicing of external debt as the reason behind
Choong et al. (2010) Malaysia1970–2006Cointegration test and Granger causality testExternal debt has a negative effect on Malaysia long-run economic growth. Furthermore, the Granger causality test also reveals the existence of short-run causality linkages between external debt and economic growth
Sen et al. (2007) Asian and the Latin American1982–2002GMM methodDebt overhang impeded growth in Latin American economies severely and the impact was moderately negative in the Asian region
Boopen et al. (2007) Mauritius1960–2004VECM approachExternal debt and economic performance of Mauritius are negatively associated in short run, as well as in the long run
Mohamed (2005)Sudan1978– 2001OLSExternal debt deters economic growth
Wijeweera et al. (2005) Sri Lanka1950–2002Error correction formulationThe study investigates whether Sri Lanka faces a debt overhang problem or not and the study result found it wrong in this case
Nguyen et al. (2003) Low Income countries1970–1999Fixed effect and GMM methodExternal debt also has indirect and adverse effects on growth through its effects on public investment
Easterly (2002)Highly indebted poor countries (HIPCs)1980–1997Regression analysisMacroeconomic policies of the HIPCs are the main causes of their high indebtedness
Were (2001) Kenya1970–1995Error correction formulationExternal debt accumulation has a negative impact on economic growth and private investment. This confirms the existence of a debt overhang problem
Chowdhury (2001)Developing countries1982–1999Extreme bounds analysisExtreme bounds analysis shows that the relationship between a debt measure and economic growth is robust to changes in the conditioning set of information. The mixed, fixed and random coefficient approach shows a statistically significant negative causal impact running from debt measures to economic growth
Fosu (1999)Sub-Saharan Africa (SSA)1980–1990OLSNegative impact of external debt on economic growth and asserted that this negative impact may be due to poor performance of the debt-receiving countries
Empirical studies on Bangladesh
Saifuddin (2016) Bangladesh1974–2014Two stage least squaresPublic debt has an indirect positive effect on growth through its positive influence on investment
Yeasmin et al. (2015) Bangladesh1972–2012ARDL approachSignificant adverse effect of debt on growth in Bangladesh
Farhana and Chowdhury (2014) Bangladesh1972–2010ARDL approachExternal debt stock adversely affects the GDP growth
Shah and Pervin (2012) Bangladesh1974–2010Error correction formulationLong run significant negative effect of external public debt service and positive effect of external public debt stock on GDP growth
Rahman et al. (2012) Bangladesh1972–2010OLSSignificant positive correlation exists between external debt and GDP
Source: Own elaboration

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