Akademik Veri Yönetim Sistemi
Open Economies Review, 2025 (SSCI)
This study investigates the differential impacts of external debt on economic growth as well as the differential effect of debt below and above a threshold that is empirically estimated using panel data from 40 sub-Saharan African countries during 1980–2023. For this purpose, the study utilized the Generalized Method of Moments (GMM) and Panel Threshold Regression (PTR) estimation techniques. The study finds that external debt has a negative and significant effect on GDP growth above the threshold level of 43.25%. Debt has a relatively small influence on growth below this threshold. Also, the anticipated debt threshold varies depending on the estimating approach and growth control variables. Our findings highlight the need for smart debt management policies, as well as the need for SSA nations to implement effective domestic revenue-generation measures to supplement foreign investment. We suggest merging informal companies into a uniform, cutting-edge platform to improve domestic revenue collection. Furthermore, macroeconomic stability to enhance debt negotiating terms and lower excessive debt payment costs, which deplete government resources. These policy initiatives are crucial to guaranteeing SSA’s long-term economic development in the face of mounting foreign debt. Our analysis adds to the previous studies by giving empirical data on the non-linear relationship between foreign debt and economic development, which has crucial implications for policy design in developing countries.