Jalles, Joa Tovar
December 2011
Journal of Economic Development;Dec2011, Vol. 36 Issue 4, p41
Academic Journal
The quality of governance, and in particular of the control of corruption and the level of democracy, is tested as a factor influencing the relationship between external debt (borrowing opportunities/constraints) and economic growth in a panel of 72 developing countries over the 1970-2005 period. Countries with lower corruption seem to be able to use and manage their debt better. Moreover, in countries with lower levels of corruption both the positive and negative effects of debt on growth, modelled with non-linear specifications, are significant. Furthermore, evidence cannot support a clear Debt-Laffer curve in our sample. The level of debt at which the effect of debt on growth becomes negative is also higher in countries with lower corruption levels. Finally, panel Granger-causality tests only weakly support the claim that causality runs from debt/institutional quality to growth. Despite our somewhat ambiguous results we conjecture some policy implications within the HIPC initiative and donor's approach to governance issues.


Related Articles

  • A Plan to End LDC Debt and Save the Environment Too. Bigman, D. // Challenge (05775132);Jul/Aug90, Vol. 33 Issue 4, p33 

    The article discusses the economic development generated by the capital transfer from the rich industrialized countries to the poor developing countries. In the 1970s, it was mostly used by the debtor countries to buffer the effects of soaring oil prices, massive changes in the relative prices...

  • INTERNATIONAL DEBT.  // Anti-Capitalist Dictionary: Movements, Histories & Motivations;2006, p127 

    A definition of the term "international debt" is presented. It is also known as external or third world debt which is largely a problem faced by developing countries. It is a money which borrowed from international institutions like the International Monetary Fund, the World Bank and regional...

  • `Jubilee' Campaign Wants to Cancel Third-World Debt. Tooley, Mark // Insight on the News;11/22/99, Vol. 15 Issue 43, p46 

    Looks at the international `Jubilee 2000' campaign to cancel all Third World debt to the West. Basis of the total forgiveness concept of the campaign; Debt relief condition to reduce corruption in Third World governments; Western debt forgiveness as reparation for Western colonialism and...

  • Growth and foreign indebtedness in developing countries: An empirical study using long-term... Afxentiou, Panos C.; Serletis, Apostolos // Journal of Developing Areas;Fall96, Vol. 31 Issue 1, p25 

    Explores economic growth, foreign investment and foreign indebtedness in 55 developing countries. Categorization of countries according to depth of indebtedness and income; Link between foreign investment and growth.

  • Monitoring the journals. Flanagan, David J.; Bateman, Fred // Business Economics;Apr90, Vol. 25 Issue 2, p67 

    Comments on the article `Sovereign Debt: Is to Forgive to Forget?' by Jeremy Bulow and Kenneth Rogoff that appeared in the March 1989 issue of `The American Economic Review.' Rise in volume of international loans to less-developed countries; Model allowing a country to employ reputation or...

  • The Latin American debt.  // Commonweal;2/27/87, Vol. 114 Issue 4, p105 

    Third-world debt now amounts to about $1 trillion, half of which is in Latin America. Many US banks have third-world loans greater than their capital base. A combination of cost sharing and linkage to domestic performance would be the most effective and fairest solution to the debt problem.

  • Swapping Third World debt.  // Foreign Policy;Winter86/87, Issue 65, p85 

    Understanding how and why Third World debt swapping developed and how it works. How swapping can serve as a model for a political solution to debt crisis for both debtors and creditors. Implications of debt swapping. Baker plan; Secondary markets; Debt capitalization.

  • Third world debt is still growing. Gardner, Gary // World Watch;Jan/Feb95, Vol. 8 Issue 1, p37 

    Discusses the growth of external debts of developing countries around the world. Rates of increase; Reasons for increase; Prospects for economic development of developing countries.

  • Testing for weak-level efficiency in the secondary market for developing country debt. Webster, Thomas J. // Journal of Applied Business Research;Winter95, Vol. 11 Issue 1, p73 

    Investigates the presence of weak level efficiency in the secondary market for developing country debt by modeling as autoregressive integrated moving-average (ARIMA) processes debt price variations of eight large debtor countries that were actively traded during the period January 1986 to...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics