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External debt, trade and FDI on economic growth of least developed countries

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  • O47 - Measurement Of Economic Growth
  • Aggregate Productivity
  • Cross-Country Output Convergence
  • F34 - International Lending And Debt Problems
  • O57 - Comparative Studies Of Countries
  • Economics


This study evaluates the impact of public external debt on long term economic growth of forty least developed countries (LDCs). Arellano-Bond SGMM method is used on unbalanced panel data spanning from 1975 to 2010. A comparative analysis based on different debt specifications and samples is provided. Overall, our findings suggest that high external debt depresses economic growth, regardless of the nature of the debt. Furthermore, debt relief initiatives are crucial as evidenced in the lower negative debt effects on growth in HIPCs sub-sample relative to non-HIPCs. Additionally, trade, initial values of FDI and ODA matter in economic growth of LDCs.

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