The effect of foreign debt on the economic growth
This study examines the effect of foreign debt on the economic growth. Using a time series Indonesian data over 1981 - 2017, we employ the Error Correction Model based on the debt overhang theory. Foreign debt was found to produce negative and significant effect on the economic growth both in the sh...
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| Format: | Article |
| Language: | English |
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Penerbit Universiti Kebangsaan Malaysia
2021
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| Online Access: | http://journalarticle.ukm.my/18803/ http://journalarticle.ukm.my/18803/1/jeko_553-9.pdf |
| _version_ | 1848814671046377472 |
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| author | Kurniasih, Erni Panca |
| author_facet | Kurniasih, Erni Panca |
| author_sort | Kurniasih, Erni Panca |
| building | UKM Institutional Repository |
| collection | Online Access |
| description | This study examines the effect of foreign debt on the economic growth. Using a time series Indonesian data over 1981 - 2017, we employ the Error Correction Model based on the debt overhang theory. Foreign debt was found to produce negative and significant effect on the economic growth both in the short- and long-run. The paper further found that Foreign Direct Investment (FDI) improves the economic growth. Foreign debt that continues to increase drastically in the long-run could slow down the economic growth which may indicate the economy experiencing a debt overhang. It is thus imperative for the government to ensure the debt ratio remain below a certain threshold. Further, foreign debt should be prioritized to develop infrastructure with a broad multiplier effect and the FDI likewise prioritized for labor-intensive sectors. |
| first_indexed | 2025-11-15T00:37:47Z |
| format | Article |
| id | oai:generic.eprints.org:18803 |
| institution | Universiti Kebangasaan Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T00:37:47Z |
| publishDate | 2021 |
| publisher | Penerbit Universiti Kebangsaan Malaysia |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | oai:generic.eprints.org:188032022-06-23T08:46:30Z http://journalarticle.ukm.my/18803/ The effect of foreign debt on the economic growth Kurniasih, Erni Panca This study examines the effect of foreign debt on the economic growth. Using a time series Indonesian data over 1981 - 2017, we employ the Error Correction Model based on the debt overhang theory. Foreign debt was found to produce negative and significant effect on the economic growth both in the short- and long-run. The paper further found that Foreign Direct Investment (FDI) improves the economic growth. Foreign debt that continues to increase drastically in the long-run could slow down the economic growth which may indicate the economy experiencing a debt overhang. It is thus imperative for the government to ensure the debt ratio remain below a certain threshold. Further, foreign debt should be prioritized to develop infrastructure with a broad multiplier effect and the FDI likewise prioritized for labor-intensive sectors. Penerbit Universiti Kebangsaan Malaysia 2021 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/18803/1/jeko_553-9.pdf Kurniasih, Erni Panca (2021) The effect of foreign debt on the economic growth. Jurnal Ekonomi Malaysia, 55 (3). pp. 125-136. ISSN 0127-1962 https://www.ukm.my/jem/issue/v55i3/ |
| spellingShingle | Kurniasih, Erni Panca The effect of foreign debt on the economic growth |
| title | The effect of foreign debt on the economic growth |
| title_full | The effect of foreign debt on the economic growth |
| title_fullStr | The effect of foreign debt on the economic growth |
| title_full_unstemmed | The effect of foreign debt on the economic growth |
| title_short | The effect of foreign debt on the economic growth |
| title_sort | effect of foreign debt on the economic growth |
| url | http://journalarticle.ukm.my/18803/ http://journalarticle.ukm.my/18803/ http://journalarticle.ukm.my/18803/1/jeko_553-9.pdf |