Abstract: The effect of public and domestic debt on the growth rate varies from country to country, depending on initial debt accumulations and how the debt is used. The aim of the study was to investigate the relationship between external debt and economic growth in Zambia for the period 1985-2021. Economic growth, external debt, FDI and trade were study variables. According to the PP test, economic growth and FDI were I(0) whereas external debt and trade were I(1). The ARDL model was used for estimation. The study found that both in the short and long run, external debt negatively affects economic growth. Specifically, a 10 percent change in external debt leads to a -0.21 percent change in growth in the long run and a -0.71 percent change in the short run. The study also finds that FDI has a positive effect in the short run. The study recommends low levels of external debt so as to minimize the negative effect on economic growth.
Keywords: External debt, economic growth, FDI, ARDL model, Zambia.
Title: PUBLIC DEBT AND ECONOMIC GROWTH IN ZAMBIA: A TIME SERIES ANALYSIS 1985-2021
Author: MUTALE ABRAHAM
International Journal of Thesis Projects and Dissertations (IJTPD)
Vol. 12, Issue 1, January 2024 - March 2024
Page No: 1-10
Research Publish Journals
Website: www.researchpublish.com
Published date: 05-January-2024
