Debt Swap Funding Nexus Education Attainment in the Presence of Per Capita Income in Debt Burdened Economies: An Empirical Analysis Using Two Step SYS-GMM

Debt swap funding is one of the important catalysts for education attainment in debt-burdened economies. It enhances the education status by providing extra fiscal space for the government to invest resources for quality education, increasing capital inflow, and reducing the debt burden in the recipient countries. The main purpose of the study is to investigate the impact of debt swap funding on education attainment in debt-burdened economies for the period 2003-2021. The relationship between debt swap funding and education attainment is analyzed in the presence of per capita income of the respective countries by using the advanced methodology Two Step System GMM. Other variables, which are the main determinants of debt swap funding, like IMF structural adjustment program and debt service, are used as control variables. Education attainment is also dependent on per capita income included in the model, along with growth parameters of new growth theory (technological growth, population growth, and depreciation rate), which are part of the control variables. The results of the study show a positive and statistically significant relation between debt swap funding and education attainment in debt-burdened economies in the presence of per capita income. Policy recommendations are proposed in light of the results obtained regarding the debt swap funding nexus education attainment.