Debt services capital inflows and economic growth in North African countries

The North African countries namely Algeria, Egypt, Mauritania, Morocco and Tunisia rely heavily on external funds for financing its development. Such external funding usually takes the form of external loans. This study advances the argument that the real problem that impedes the process of economic...

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Main Author:	Abud, Elmashat Essadq Ali
Format:	Thesis
Language:	eng eng
Published:	2014
Subjects:	HJ Public Finance
Online Access:	https://etd.uum.edu.my/4351/1/S91314.pdf https://etd.uum.edu.my/4351/2/S91314_abstract.pdf
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id	my-uum-etd.4351
record_format	uketd_dc
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Jaafar, Ahmad Sobri Abdullah, Hussin
topic	HJ Public Finance
spellingShingle	HJ Public Finance Abud, Elmashat Essadq Ali Debt services capital inflows and economic growth in North African countries
description	The North African countries namely Algeria, Egypt, Mauritania, Morocco and Tunisia rely heavily on external funds for financing its development. Such external funding usually takes the form of external loans. This study advances the argument that the real problem that impedes the process of economic growth is the challenge of inadequate real resources for capital formation, due to high external debt servicing. The mounting debt stocks have discouraged the inflow of foreign capital in the form of Foreign Direct Investment (FDI) for fear of macroeconomic distortions. It is scarcely surprising that high debt-service obligation has not only made North African economies to perform poorly but also to rely heavily on foreign sources of budgetary support, thereby creating an unending cycle of economic crisis. In a nutshell, this study used a simultaneous equations model to test the process of interaction between FDI inflows, external debt service and economic growth. The analysis uses the Three Stage Least Square and panel cointegration test to investigate the relationship between debt service, FDI inflow and other determinants and economic growth. The results showed a negative sign and significant relation between debt service and economic growth. The results also show that FDI inflows play an important role and increased the economic growth. The interaction variables between debt crisis with FDI inflows, debt crisis and domestic saving show a negative effect on economic growth in some countries and a positive effect on economic growth in others. In terms of policy, the governments should promote rational and proper utilization of resources, while trying to get more concession on newly acquired debt inflows. It also indicates that policymakers should act early when choosing to lean against credit booms, before the debt service reaches critical levels.
format	Thesis
qualification_name	Ph.D.
qualification_level	Doctorate
author	Abud, Elmashat Essadq Ali
author_facet	Abud, Elmashat Essadq Ali
author_sort	Abud, Elmashat Essadq Ali
title	Debt services capital inflows and economic growth in North African countries
title_short	Debt services capital inflows and economic growth in North African countries
title_full	Debt services capital inflows and economic growth in North African countries
title_fullStr	Debt services capital inflows and economic growth in North African countries
title_full_unstemmed	Debt services capital inflows and economic growth in North African countries
title_sort	debt services capital inflows and economic growth in north african countries
granting_institution	Universiti Utara Malaysia
granting_department	Othman Yeop Abdullah Graduate School of Business
publishDate	2014
url	https://etd.uum.edu.my/4351/1/S91314.pdf https://etd.uum.edu.my/4351/2/S91314_abstract.pdf
_version_	1776103639115366400
spelling	my-uum-etd.43512023-01-18T08:42:55Z Debt services capital inflows and economic growth in North African countries 2014 Abud, Elmashat Essadq Ali Jaafar, Ahmad Sobri Abdullah, Hussin Othman Yeop Abdullah Graduate School of Business Othman Yeop Abdullah Graduate School of Business HJ Public Finance The North African countries namely Algeria, Egypt, Mauritania, Morocco and Tunisia rely heavily on external funds for financing its development. Such external funding usually takes the form of external loans. This study advances the argument that the real problem that impedes the process of economic growth is the challenge of inadequate real resources for capital formation, due to high external debt servicing. The mounting debt stocks have discouraged the inflow of foreign capital in the form of Foreign Direct Investment (FDI) for fear of macroeconomic distortions. It is scarcely surprising that high debt-service obligation has not only made North African economies to perform poorly but also to rely heavily on foreign sources of budgetary support, thereby creating an unending cycle of economic crisis. In a nutshell, this study used a simultaneous equations model to test the process of interaction between FDI inflows, external debt service and economic growth. The analysis uses the Three Stage Least Square and panel cointegration test to investigate the relationship between debt service, FDI inflow and other determinants and economic growth. The results showed a negative sign and significant relation between debt service and economic growth. The results also show that FDI inflows play an important role and increased the economic growth. The interaction variables between debt crisis with FDI inflows, debt crisis and domestic saving show a negative effect on economic growth in some countries and a positive effect on economic growth in others. In terms of policy, the governments should promote rational and proper utilization of resources, while trying to get more concession on newly acquired debt inflows. It also indicates that policymakers should act early when choosing to lean against credit booms, before the debt service reaches critical levels. 2014 Thesis https://etd.uum.edu.my/4351/ https://etd.uum.edu.my/4351/1/S91314.pdf text eng public https://etd.uum.edu.my/4351/2/S91314_abstract.pdf text eng public Ph.D. doctoral Universiti Utara Malaysia ADB, (2012), Economic and social challenges beyond the revolution,The African Development Bank (AFDB) Group, Tunis-Belvedere. Abdullah, H., Habibullah, M.S., & Baharumshah, A.Z. (2008). Fiscal Policy, Institutions and Economic Growth in Asian Economies: Evidence from the Pedroni’s Cointegration Approach. International Journal of Business and Management. Vol 3(4), 107-126. Adepoju, A. A., Salau, A.S., & Obayelu, A. E. (2007). 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Debt services capital inflows and economic growth in North African countries

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