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Does external debt- poverty relationship confirm the debtoverhang hypothesis for developing counties?

Author

Listed:
  • Taha Zaghdoudi

    (Faculty of Law, Economics and Management of Jendouba, Tunisia)

  • Abdelaziz Hakimi

    (Faculty of Law, Economics and Management of Jendouba, Tunisia)

Abstract
This paper investigates the impact of external debt on poverty for a panel of 25 developing countries over the period 2000-2015. By performing panel cointegration model, we found strong evidence of a positive and significant long-run relationship between poverty, external debt, GDP per capita, gross domestic and fixed investment. Findings indicate also the existence of negative and significant association between poverty, infrastructure, health condition and openness. The Granger-causality results indicate bidirectional causality between external debt and poverty in both short- and long-run. This paper supports the view that external debt increase poverty in developing countries.

Suggested Citation

  • Taha Zaghdoudi & Abdelaziz Hakimi, 2017. "Does external debt- poverty relationship confirm the debtoverhang hypothesis for developing counties?," Economics Bulletin, AccessEcon, vol. 37(2), pages 653-665.
    • Handle: RePEc:ebl:ecbull:eb-16-00874
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    Cited by:

    1. Musakwa Mercy T. & Odhiambo Nicholas M. & Nyasha Sheilla, 2021. "The impact of foreign capital inflows on poverty in Vietnam: An empirical investigation," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 7(2), pages 31-49, December.
    2. Musakwa Mercy T. & Odhiambo Nicholas M. & Nyasha Sheilla, 2021. "The impact of foreign capital inflows on poverty in Vietnam: An empirical investigation," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 7(2), pages 31-49, December.
    3. Musakwa Mercy T. & Odhiambo Nicholas M. & Nyasha Sheilla, 2021. "The impact of foreign capital inflows on poverty in Vietnam: An empirical investigation," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 7(2), pages 31-49, December.
    4. Musakwa Mercy T. & Odhiambo Nicholas M. & Nyasha Sheilla, 2021. "The impact of foreign capital inflows on poverty in Vietnam: An empirical investigation," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 7(2), pages 31-49, December.
    5. Saida Daly & Nihel Benali & Manal Yagoub, 2022. "Financing Sustainable Development, Which Factors Can Interfere?: Empirical Evidence from Developing Countries," Sustainability, MDPI, vol. 14(15), pages 1-22, August.
    6. Noman Arshed & Sidra Nasir & Muhammad Ibrahim Saeed, 2022. "Impact of the External Debt on Standard of Living: A Case of Asian Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 163(1), pages 321-340, August.
    7. Khemais Zaghdoudi, 2018. "Is the relationship between external debt and human development non-linear? A PSTR approach for developing countries," Economics Bulletin, AccessEcon, vol. 38(4), pages 2194-2216.
    8. MT Musakwa & N.M. Odhiambo, 2021. "The Impact of Foreign Capital Inflows on Poverty in Vietnam: An Empirical Investigation," Working Papers AESRI-2021-10, African Economic and Social Research Institute (AESRI), revised Oct 2021.
    9. Muhammad Shahid & Mahmood Shah & Bibi Aisha Sadiqa, 2019. "Foreign Debt and Debt Servicing Relief Effect Implications in Pakistan: A Poverty Reduction Strategy," Global Economics Review, Humanity Only, vol. 4(4), pages 23-34, December.

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    More about this item

    Keywords

    Poverty; External debt;

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • F3 - International Economics - - International Finance

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