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External Debt, Public Investment, and Growth in Low-Income Countries

Author/Editor: Clements, Benedict J. | Bhattacharya, Rina | Nguyen, Toan Quoc
Authorized for Distribution: December 1, 2003
Electronic Access: Free Full Text (PDF file size is 294KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: This paper examines the channels through which external debt affects growth in low-income countries. Our results suggest that the substantial reduction in the stock of external debt projected for highly indebted poor countries (HIPCs) would directly increase per capita income growth by about 1 percentage point per annum. Reductions in external debt service could also provide an indirect boost to growth through their effects on public investment. If half of all debt-service relief were channeled for such purposes without increasing the budget deficit, then growth could accelerate in some HIPCs by an additional 0.5 percentage point per annum.
 
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Series: Working Paper No. 03/249
Subject(s): External debt | Public investment | Economic growth | Low income developing countries
Author's keyword(s): External Debt | Debt Service | Growth | Public Investment
 
English  
    Published:   December 1, 2003        
    ISBN/ISSN:   1934-7073   Format:   Paper
    Stock No:   WPIEA2492003   Pages:   24
    Price:   US$15.00 (Academic Rate: US$15.00 )
       
     
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