IDEAS home Printed from https://ideas.repec.org/a/sae/smppub/v9y2020i2p221-236.html
   My bibliography  Save this article

External Debt Distress in South Asia: Evidence from Panel Data Analysis

Author

Listed:
  • Shujaat Abbas
  • Shahida Wizarat
  • Sadia Mansoor

Abstract

This study is an attempt to explore social and economic determinants of external debt distress in five selected South Asian countries, that is, Bangladesh, India, Nepal, Pakistan and Sri Lanka, from 1980 to 2018, by using the contemporary panel fixed effect model and system generalized methods of moments. The findings revealed that the major determinants of external debt distress in selected South Asian countries are large and increasing current account deficits, lower gross capital formation, foreign direct investment and large military expenditures. Among selected socio-economic variables, the increase in life expectancy increases external debt distress, whereas urbanization reduces it considerably. The study urges selected South Asian countries to correct highly unfavourable current account balance, resolve regional conflicts leading to the reduction of the arms race and make the macroeconomic environment friendly for domestic and foreign investment to reduce exploding external debt distress. JEL Classification: C33, E22, F32, H63

Suggested Citation

  • Shujaat Abbas & Shahida Wizarat & Sadia Mansoor, 2020. "External Debt Distress in South Asia: Evidence from Panel Data Analysis," South Asian Journal of Macroeconomics and Public Finance, , vol. 9(2), pages 221-236, December.
    • Handle: RePEc:sae:smppub:v:9:y:2020:i:2:p:221-236
    DOI: 10.1177/2277978720966485
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/2277978720966485
    Download Restriction: no
    File URL: https://libkey.io/10.1177/2277978720966485?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Matteo Cervellati & Uwe Sunde, 2011. "Life expectancy and economic growth: the role of the demographic transition," Journal of Economic Growth, Springer, vol. 16(2), pages 99-133, June.
    2. Emilio Colombo, 2009. "The Politics of External Debt in Developing Countries," Working Papers 176, University of Milano-Bicocca, Department of Economics, revised Dec 2009.
    3. Daron Acemoglu & Simon Johnson, 2007. "Disease and Development: The Effect of Life Expectancy on Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 115(6), pages 925-985, December.
    4. Shin-ichi Fukuda & Yoshifumi Kon, 2012. "Macroeconomic Impacts of Foreign Exchange Reserve Accumulation: Theory and International Evidence," Chapters, in: Masahiro Kawai & Peter J. Morgan & Shinji Takagi (ed.), Monetary and Currency Policy Management in Asia, chapter 5, Edward Elgar Publishing.
    5. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, April.
    6. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    7. Abbas Shujaat & Wizarat Shahida, 2018. "Military Expenditure and External Debt in South Asia: A Panel Data Analysis," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 24(3), pages 1-7, September.
    8. Bacha, Edmar L., 1990. "A three-gap model of foreign transfers and the GDP growth rate in developing countries," Journal of Development Economics, Elsevier, vol. 32(2), pages 279-296, April.
    9. Menbere Workie Tiruneh, 2004. "An Empirical Investigation Into the Determinants of External Indebtedness," Prague Economic Papers, Prague University of Economics and Business, vol. 2004(3), pages 261-277.
    10. Abdul Waheed, 2017. "Determinants of External Debt: A Panel Data Analysis for Oil and Gas Exporting and Importing Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 234-240.
    11. Shujaat Abbas & Abdul Waheed, 2019. "Pakistan’s Global Trade Potential: A Gravity Model Approach," Global Business Review, International Management Institute, vol. 20(6), pages 1361-1371, December.
    12. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    13. Muhammad Azam & Yi Feng, 2017. "Does military expenditure increase external debt? Evidence from Asia," Defence and Peace Economics, Taylor & Francis Journals, vol. 28(5), pages 550-567, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hajamini, Mehdi & Falahi, Mohammad Ali, 2018. "Economic growth and government size in developed European countries: A panel threshold approach," Economic Analysis and Policy, Elsevier, vol. 58(C), pages 1-13.
    2. Abdoul’ Ganiou Mijiyawa & Djoulassi K. Oloufade, 2023. "Effect of Remittance Inflows on External Debt in Developing Countries," Open Economies Review, Springer, vol. 34(2), pages 437-470, April.
    3. Michał Marcin Kobierecki & Michał Pierzgalski, 2022. "Sports Mega-Events and Economic Growth: A Synthetic Control Approach," Journal of Sports Economics, , vol. 23(5), pages 567-597, June.
    4. Vishal Jaunky, 2013. "The Wealth-Health Nexus: New Global Evidence," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 41(2), pages 115-122, June.
    5. Miomir Jovanović & Ljiljana Kašćelan & Aleksandra Despotović & Vladimir Kašćelan, 2015. "The Impact of Agro-Economic Factors on GHG Emissions: Evidence from European Developing and Advanced Economies," Sustainability, MDPI, vol. 7(12), pages 1-21, December.
    6. Ferreira, Candida, 2018. "Financial Crisis, Banking Sector Performance and Economic Growth in the European Union," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 71(3), pages 257-288.
    7. Trung V. Vu, 2023. "Life expectancy and human capital: New empirical evidence," Health Economics, John Wiley & Sons, Ltd., vol. 32(2), pages 395-412, February.
    8. Domicián Máté & Adam Novotny & Daniel Francois Meyer, 2021. "The Impact of Sustainability Goals on Productivity Growth: The Moderating Role of Global Warming," IJERPH, MDPI, vol. 18(21), pages 1-13, October.
    9. Mine Yilmazer & Serkan inar, 2015. "Human Capabilities and Economic Growth: A Comparative Human Capability Index," International Journal of Economics and Financial Issues, Econjournals, vol. 5(4), pages 843-853.
    10. Jiangjiang Guo & Ting Ji & Wenqian Zhang & Lingfeng Dong, 2023. "Understanding Sustained Knowledge Contribution from a Motivation Crowding Perspective: A Case Study in a Chinese Q&A Community," Sustainability, MDPI, vol. 15(3), pages 1-13, January.
    11. Sharofiddinov Husniddin & Moinul Islam & Koji Kotani, 2023. "How does the number of water users in a land reform matter for irrigation water availability?," Working Papers SDES-2023-5, Kochi University of Technology, School of Economics and Management, revised Sep 2023.
    12. Sharofiddinov, Husniddin & Islam, Moinul & Kotani, Koji, 2024. "How does the number of water users in a land reform matter for water availability in agriculture?," Agricultural Water Management, Elsevier, vol. 293(C).
    13. Jorge José Luis Reynoso-González. & Adrián De León Arias., 2021. "Crecimiento económico y gasto público en salud según población objetivo en México. (Economic Growth and Public Spending on Health According to Target Population in Mexico)," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(1), pages 89-114, May.
    14. Ortiz, Cristian & Alvarado, Rafael & Salinas, Aldo, 2019. "The effect of military spending on output: New evidence at the global and country group levels using panel data cointegration techniques," Economic Analysis and Policy, Elsevier, vol. 62(C), pages 402-414.
    15. Cândida Ferreira, 2015. "The relevance of the EU banking sector to economic growth and the recent financial crisis," Working Papers Department of Economics 2015/02, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    16. Obinna Franklin Ezeibekwe, 2020. "Financial Development And Economic Growth In The Presence Of Simultaneity Bias: Panel Data Evidence," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 25, pages 47-67, June.
    17. Grigorakis, Nikolaos & Floros, Christos & Tsangari, Haritini & Tsoukatos, Evangelos, 2018. "Macroeconomic and financing determinants of out of pocket payments in health care: Evidence from selected OECD countries," Journal of Policy Modeling, Elsevier, vol. 40(6), pages 1290-1312.
    18. Marcello Basili & Filippo Belloc, 2015. "How To Measure The Economic Impact Of Vector-Borne Diseases At Country Level," Journal of Economic Surveys, Wiley Blackwell, vol. 29(5), pages 896-916, December.
    19. Zdravko Šergo & Amorino Poropat & Pavlo Ružić, 2014. "The determinants of length of stay and arrivals of tourists in the Croatia: a panel data approach," Tourism and Hospitality Industry section8-4, University of Rijeka, Faculty of Tourism and Hospitality Management.
    20. Hajamini, Mehdi, 2015. "The non-linear effect of population growth and linear effect of age structure on per capita income: A threshold dynamic panel structural model," Economic Analysis and Policy, Elsevier, vol. 46(C), pages 43-58.

    More about this item

    Keywords

    External debt; social and economic determinants; panel data; South Asia;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:smppub:v:9:y:2020:i:2:p:221-236. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.