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External Debt and Economic Growth : The Case of Emerging Economy

Author

Listed:
  • Kharusi, Sami Al

    (Sultan Qaboos University)

  • Ada, Mbah Stella

    (Department of Economics and Development Studies, Federal University)

Abstract

This study investigated the relationship between government external borrowing and economic growth, prompted by continuous increases in Oman’s external debt to finance its annual budget. Time series data for the period 1990~2015 were collected from the World Bank and the Central Bank of Oman. The study employed the Autoregressive Distributed Lag cointegration approach explain the error correction mechanism to ascertain the short-run dynamic nature of external debt and economic growth. Consistent with some existing empirical evidence, the study reveals a negative and significant influence of external debt on economic growth in Oman. Further, gross fixed capital was found to be positively significant in determining growth performance in Oman. The study, therefore, recommends a more productive use of the external debt fund in order to affect positive growth.

Suggested Citation

  • Kharusi, Sami Al & Ada, Mbah Stella, 2018. "External Debt and Economic Growth : The Case of Emerging Economy," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 33(1), pages 1141-1157.
    • Handle: RePEc:ris:integr:0745
    as

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    More about this item

    Keywords

    Economic Growth; External Debt; Government Investment; Oman; Public Investment;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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