A CRITICAL REVIEW OF EXTERNAL DEBT AND ECONOMIC GROWTH RELATIONSHIP: A LESSON FOR INDEBTEDNESS COUNTRIES

Abstract

The purpose of this paper is to review existing empirical studies of external debt and economic growth relationship. The decline in investment and growth performance of the highly indebted countries in the past three decades is frequently attributed, at least to some extent, to the burden of their foreign debt, a phenomenon which has been recognised as debt overhang. Empirical results indicate that it is difficult to say whether external debt has a negative or positive effect on economic growth. It is also improper to make any type of generalizations of the potential relationship between economic growth and external debt. Thus, it is necessary to consider the case of each country separately

Abstract

Bu makalenin amacı dış borçlar ile ekonomik büyüme arasındaki ilişkiyi inceleyen ampirik çalışmaları ortaya koymaktır. Borçlu ülkelerde son otuz yılda yatırımların ve dolayısıyla ekonomik büyümenin büyük ölçüde azalması, bu alanda araştırmaların yapılmasını ve dış borç-büyüme arasındaki ilişkinin önemini arttırmıştır. Yapılan ampirik çalışmalara göre, dış borçların ekonomik büyümeyi pozitif mi yoksa negatif mi etkilediğini söylemek zordur. Bu yüzden genelleme yapmanın bir anlamı olmayacağından, her ülke ayrı ayrı incelenmelidir

References

1. AFXENTIOU, Panos C. (1993): “GNP Growth and Foreign Indebtedness in Middle-income” Developing Countries, International Economic Journal, Cilt 7, Sayı 3, ss. 81-92.
2. AFXENTIOU, Panos C. ve SERLETIS, Apostolos (1996a): “Foreign Indebtedness in Low and Middle Income Developing Countries”, Social and Economic Studies, Cilt 45, Sayı 1, ss. 133-159.
3. AFXENTIOU, Panos C. ve SERLETIS, Apostolos (1996): “Growth and Foreign Indebtedness in Developing Countries : An Empirical Study Using Long-term Cross-Country Data”, The Journal of Developing Areas, Cilt 31, Fall, ss. 25-40.
4. AMOATENG, Kofi. ve AMOAKO, Adu.B. (1996): “Economic Growth, Export and External Debt Causality: The Case of African Countries”, Applied Economics, Cilt 28, ss. 21-27.
5. BAUERFREUND, Ohad. (1989): “External Debt and Economic Growth: A Computable General Equilibrium Case Study of Turkey 1985-1986”, Duke University Ph.D.
6. BORENSZTEIN, Eduardo (1990): “Debt Overhang, Credit Rationing, and Investment”, Journal of Development Economics, Cilt 32, ss. 315-335.
7. BULLOW, Jeremy ve ROGOFF, Kenneth (1990): “Cleaning Up Third World Debt Without Getting Taken To the Cleaners”, Journal of Economic Perspectives, Cilt 4, Sayı 1, ss. 31-42.
8. CHOWDHURY, Khorshed (1994): “A Structural Analysis of External Debt and Economic Growth: Some Evidence From Selected Countries in Asia and the Pacific”, Applied Economics, Cilt 26, ss. 1121-1131.

9. COHEN, Daniel (1993): “Low Investment and Large LDC Debt in the 1980's”, The American Economic Review, Cilt 83, Sayı 3, ss. 437-449.
10. CUNNINGHAM, Rosemary.T. (1993): “The Effects of Debt Burden on Economic Growth in Heavily Indebted Nations”, Journal of Economic Development, Cilt 18, Sayı 1, ss. 115-126.
11. DESHPANDE, Ashwini (1990): “The Debt Overhang and the Disincentive to Invest”, Journal of Development Economics, Cilt 52, ss. 169-187.
12. FELDSTEIN, Martin (1986): “International Debt Service and Economic Growth: Some Simple Analytics”, National Bureau of Economic Research, 2076, 35 Pages.
13. FOSU, Agustin K. (1996): “The Impact of External Debt on Economic Growth in Sub-Saharan Africa”, Journal of Economic Development, Cilt 21, Sayı 1, ss. 93-118.
14. FOSU, Agustin K. (1999): “The External Debt Burden and Economic Growth in the 1980s: Evidence From Sub-Saharan Africa”, Canadian Journal of Development Studies, Cilt 20, Sayı 2, ss. 307-318.
15. FRY, Maxwell J. (1986): “Terms-Of-Trade Dynamics in Asia: An Analysis of National Saving and Domestic Investment Responses to Terms-OfTrade Changes in 14 Asian LDC”, Journal of International Money and Finance, Cilt 5, ss. 57-73.
16. GEIGER, Linwood.T. (1990) Debt and Economic Development in Latin America, The Journal of Developing Areas, 24, 181-194.
17. HOFMAN, Bert ve REISEN, Helmut (1991): “Some Evidence on Debt-Related Determinants of Investment and Consumption in Heavily Indebted Countries”, Weltwirtschafliches Archiv, Cilt 127 Sayı 2, ss. 280-297.
18. IMF. (1989) World Economic Outlook, Supplementary Note 1, Washington, USA.
19. KARAGOL, Erdal (2002): “The Causality Analysis of External Debt Service and GNP: The Case of Turkey”, Central Bank Review, Cilt 2, Sayı 1, ss. 39-64.
20. KRUEGER, Anne O. (1987): “Debt, Capital Flows, and LDC Growth”, American Economic Review, Cilt 77, ss. 159-164.
21. PERASSO, Giancarlo (1992): “Debt Reduction Versus Appropriate Domestic Policies”, Kyklos, Cilt 45, Sayı 4, ss. 457-467.
22. ROCKERBIE, Duane W. (1993): “Credit Rationing and Macroeconomic Adjustment in Latin America”, The Quarterly of Review of Economics and Finance, Cilt 33, Sayı 4, ss.325-342.
23. ROCKERBIE, Duane W. (1994): “Did Debt Crisis Cause the Investment Crisis? Further Evidence”, Applied Economics, Cilt 26, ss. 731-738.
24. SACHS, Jeffrey D. (1986): “Managing the LDC Debt Crisis”, Brooking Papers on Economic Activity, Cilt 2, ss. 397- 431.
25. SAVVIDES, Andreas. (1992): “Investment Slowdown in Developing Countries During the 1980s: Debt Overhang Or Foreign Capital Inflows”, Kyklos, Cilt 45, Sayı 3, ss. 363-378.
26. SAWADA, Yasuyuki. (1994): “Are the Heavily Indebted Countries Solvent? Tests of Inter Temporal Borrowing Constraints”, Journal of Development Economics, Cilt 45, ss. 325-337.
27. SMYTH, David.J. ve HSING, Yu (1995): “In Search of An Optimal Debt Ratio for Economic Growth”, Contemporary Economic Policy, Cilt 13, Sayı 4, ss. 51-59.
28. WARNER, Andrew M. (1992): “Did the Debt Crisis Cause the Investment Crisis”, Quarterly Journal of Economics, Cilt 107, Sayı 4, ss. 1161- 1186.