211 – Contributed Poster Presentations: Business and Economic Statistics Section
The External Debt and Its Impact on Economic Growth and Investment in ECOWAS Countries
Brian W. Sloboda
University of Phoenix
Debt level has increased in most African countries in recent years; furthermore, in some countries at a worrisome pace. But the continent is not yet experiencing a systemic risk of a debt crisis. On a regional level, several countries in the Economic Community of West African States (ECOWAS) experienced major episodes of a financial crisis that were characterized by unsustainable fiscal deficits after several decades after independence. During this period, however, current account deficits were considered normal. Therefore, ECOWAS countries were encouraged to borrow from abroad to finance their deficits and to create a conducive environment that attracts foreign investment to boost economic growth. Meanwhile, little attention was paid to the individual countries’ absorptive capacities and ability to repay the borrowed funds. Suma (2007) posited that external funding has been crucial in developmental projects, financing capital, and budgetary support for developing countries. This research will build upon the framework of Suma (2007) but covering the ECOWAS countries from 1970-2017 via spatial regression panel regression methods. The general objective of this research is to examine the impact of external debt on economic growth in ECOWAS countries. To achieve this general objective, the specific objectives of this research are investigating the link between external debt and economic growth of ECOWAS countries; examining the structure, type, and composition of ECOWAS’ external debt; and identifying the transmission mechanism of external debt influences on economic growth of the ECOWAS countries.