External Debt-Economic Growth Nexus: The Sierra Leonean Case (1973-2021)

Sylvester Bob Hadji

doi:doi:10.11648/j.ijefm.20221002.13

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External Debt-Economic Growth Nexus: The Sierra Leonean Case (1973-2021)

Sylvester Bob Hadji

Published in International Journal of Economics, Finance and Management Sciences (Volume 10, Issue 2)

Received: 1 March 2022 Accepted: 25 March 2022 Published: 8 April 2022

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Abstract

The study investigates the nexus between external debt and economic growth in Sierra Leone for the period spanning between 1973 and 2021. In many developing countries, huge external indebtedness has been seen as a strong break on the road to economic growth and development. Indeed, the study focuses on both external and internal factors that are responsible for the external debt problem in Sierra Leone. Data employed in this study are secondary and were collected from various sources including the Central Bank of Sierra Leone and the Ministry of Finance. Key macroeconomic variables such as external debt to Gross Domestic Product (GDP) ratio, external debt service to export earnings ratio and terms of trade were specified in the model and tested for stationarity using unit root tests. The study also employed the ordinary least square (OLS) technique for the purpose of estimating the relevant parameters of the model. Various diagnostic tests are carried out to appraise the robustness of the estimated growth equation using appropriate econometric criteria. The study empirically reveals a negative nexus between external debt and economic growth in Sierra Leone for the period under study signifying that debt accumulation impacts adversely on the country’s long-run growth trajectory which confirms debt “overhang” problem in Sierra Leone. This is clearly evident in the coefficients of the variables representing debt as a ratio of GDP, debt service as a ratio of export earning and terms of trade. The study, therefore, proffers certain recommendations in line with the findings.

Published in	International Journal of Economics, Finance and Management Sciences (Volume 10, Issue 2)
DOI	10.11648/j.ijefm.20221002.13
Page(s)	54-66
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

External Debt, External Debt Accumulation, Debt Overhang, Indebtedness, Debt Service, GDP, Economic Growth

References

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Sylvester Bob Hadji. (2022). External Debt-Economic Growth Nexus: The Sierra Leonean Case (1973-2021). International Journal of Economics, Finance and Management Sciences, 10(2), 54-66. https://doi.org/10.11648/j.ijefm.20221002.13

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Sylvester Bob Hadji. External Debt-Economic Growth Nexus: The Sierra Leonean Case (1973-2021). Int. J. Econ. Finance Manag. Sci. 2022, 10(2), 54-66. doi: 10.11648/j.ijefm.20221002.13

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AMA Style

Sylvester Bob Hadji. External Debt-Economic Growth Nexus: The Sierra Leonean Case (1973-2021). Int J Econ Finance Manag Sci. 2022;10(2):54-66. doi: 10.11648/j.ijefm.20221002.13

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@article{10.11648/j.ijefm.20221002.13,
  author = {Sylvester Bob Hadji},
  title = {External Debt-Economic Growth Nexus: The Sierra Leonean Case (1973-2021)},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {10},
  number = {2},
  pages = {54-66},
  doi = {10.11648/j.ijefm.20221002.13},
  url = {https://doi.org/10.11648/j.ijefm.20221002.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20221002.13},
  abstract = {The study investigates the nexus between external debt and economic growth in Sierra Leone for the period spanning between 1973 and 2021. In many developing countries, huge external indebtedness has been seen as a strong break on the road to economic growth and development. Indeed, the study focuses on both external and internal factors that are responsible for the external debt problem in Sierra Leone. Data employed in this study are secondary and were collected from various sources including the Central Bank of Sierra Leone and the Ministry of Finance. Key macroeconomic variables such as external debt to Gross Domestic Product (GDP) ratio, external debt service to export earnings ratio and terms of trade were specified in the model and tested for stationarity using unit root tests. The study also employed the ordinary least square (OLS) technique for the purpose of estimating the relevant parameters of the model. Various diagnostic tests are carried out to appraise the robustness of the estimated growth equation using appropriate econometric criteria. The study empirically reveals a negative nexus between external debt and economic growth in Sierra Leone for the period under study signifying that debt accumulation impacts adversely on the country’s long-run growth trajectory which confirms debt “overhang” problem in Sierra Leone. This is clearly evident in the coefficients of the variables representing debt as a ratio of GDP, debt service as a ratio of export earning and terms of trade. The study, therefore, proffers certain recommendations in line with the findings.},
 year = {2022}
}

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TY  - JOUR
T1  - External Debt-Economic Growth Nexus: The Sierra Leonean Case (1973-2021)
AU  - Sylvester Bob Hadji
Y1  - 2022/04/08
PY  - 2022
N1  - https://doi.org/10.11648/j.ijefm.20221002.13
DO  - 10.11648/j.ijefm.20221002.13
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 54
EP  - 66
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20221002.13
AB  - The study investigates the nexus between external debt and economic growth in Sierra Leone for the period spanning between 1973 and 2021. In many developing countries, huge external indebtedness has been seen as a strong break on the road to economic growth and development. Indeed, the study focuses on both external and internal factors that are responsible for the external debt problem in Sierra Leone. Data employed in this study are secondary and were collected from various sources including the Central Bank of Sierra Leone and the Ministry of Finance. Key macroeconomic variables such as external debt to Gross Domestic Product (GDP) ratio, external debt service to export earnings ratio and terms of trade were specified in the model and tested for stationarity using unit root tests. The study also employed the ordinary least square (OLS) technique for the purpose of estimating the relevant parameters of the model. Various diagnostic tests are carried out to appraise the robustness of the estimated growth equation using appropriate econometric criteria. The study empirically reveals a negative nexus between external debt and economic growth in Sierra Leone for the period under study signifying that debt accumulation impacts adversely on the country’s long-run growth trajectory which confirms debt “overhang” problem in Sierra Leone. This is clearly evident in the coefficients of the variables representing debt as a ratio of GDP, debt service as a ratio of export earning and terms of trade. The study, therefore, proffers certain recommendations in line with the findings.
VL  - 10
IS  - 2
ER  -

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Author Information

Sylvester Bob Hadji

Department of Economics & Commerce, University of Sierra Leone, Freetown, Sierra Leone

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Sylvester Bob Hadji. (2022). External Debt-Economic Growth Nexus: The Sierra Leonean Case (1973-2021). International Journal of Economics, Finance and Management Sciences, 10(2), 54-66. https://doi.org/10.11648/j.ijefm.20221002.13

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ACS Style

Sylvester Bob Hadji. External Debt-Economic Growth Nexus: The Sierra Leonean Case (1973-2021). Int. J. Econ. Finance Manag. Sci. 2022, 10(2), 54-66. doi: 10.11648/j.ijefm.20221002.13

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AMA Style

Sylvester Bob Hadji. External Debt-Economic Growth Nexus: The Sierra Leonean Case (1973-2021). Int J Econ Finance Manag Sci. 2022;10(2):54-66. doi: 10.11648/j.ijefm.20221002.13

Copy | Download

@article{10.11648/j.ijefm.20221002.13,
  author = {Sylvester Bob Hadji},
  title = {External Debt-Economic Growth Nexus: The Sierra Leonean Case (1973-2021)},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {10},
  number = {2},
  pages = {54-66},
  doi = {10.11648/j.ijefm.20221002.13},
  url = {https://doi.org/10.11648/j.ijefm.20221002.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20221002.13},
  abstract = {The study investigates the nexus between external debt and economic growth in Sierra Leone for the period spanning between 1973 and 2021. In many developing countries, huge external indebtedness has been seen as a strong break on the road to economic growth and development. Indeed, the study focuses on both external and internal factors that are responsible for the external debt problem in Sierra Leone. Data employed in this study are secondary and were collected from various sources including the Central Bank of Sierra Leone and the Ministry of Finance. Key macroeconomic variables such as external debt to Gross Domestic Product (GDP) ratio, external debt service to export earnings ratio and terms of trade were specified in the model and tested for stationarity using unit root tests. The study also employed the ordinary least square (OLS) technique for the purpose of estimating the relevant parameters of the model. Various diagnostic tests are carried out to appraise the robustness of the estimated growth equation using appropriate econometric criteria. The study empirically reveals a negative nexus between external debt and economic growth in Sierra Leone for the period under study signifying that debt accumulation impacts adversely on the country’s long-run growth trajectory which confirms debt “overhang” problem in Sierra Leone. This is clearly evident in the coefficients of the variables representing debt as a ratio of GDP, debt service as a ratio of export earning and terms of trade. The study, therefore, proffers certain recommendations in line with the findings.},
 year = {2022}
}

Copy | Download

TY  - JOUR
T1  - External Debt-Economic Growth Nexus: The Sierra Leonean Case (1973-2021)
AU  - Sylvester Bob Hadji
Y1  - 2022/04/08
PY  - 2022
N1  - https://doi.org/10.11648/j.ijefm.20221002.13
DO  - 10.11648/j.ijefm.20221002.13
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 54
EP  - 66
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20221002.13
AB  - The study investigates the nexus between external debt and economic growth in Sierra Leone for the period spanning between 1973 and 2021. In many developing countries, huge external indebtedness has been seen as a strong break on the road to economic growth and development. Indeed, the study focuses on both external and internal factors that are responsible for the external debt problem in Sierra Leone. Data employed in this study are secondary and were collected from various sources including the Central Bank of Sierra Leone and the Ministry of Finance. Key macroeconomic variables such as external debt to Gross Domestic Product (GDP) ratio, external debt service to export earnings ratio and terms of trade were specified in the model and tested for stationarity using unit root tests. The study also employed the ordinary least square (OLS) technique for the purpose of estimating the relevant parameters of the model. Various diagnostic tests are carried out to appraise the robustness of the estimated growth equation using appropriate econometric criteria. The study empirically reveals a negative nexus between external debt and economic growth in Sierra Leone for the period under study signifying that debt accumulation impacts adversely on the country’s long-run growth trajectory which confirms debt “overhang” problem in Sierra Leone. This is clearly evident in the coefficients of the variables representing debt as a ratio of GDP, debt service as a ratio of export earning and terms of trade. The study, therefore, proffers certain recommendations in line with the findings.
VL  - 10
IS  - 2
ER  -

Copy | Download