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The impact of foreign debt on economic growth in South Africa

This study analyses the economic impact between foreign debt and economic growth in South Africa. By fitting a production function model to annual data for the period 1980-2011, the study examines the dynamic effect of debt service, capital stock and labour force on the economic growth of the country. By following Cunningham (1993), it has identified the long-run and short-run causal relationships among the included variables. The results indicate that the debt servicing burden has a negative effect on the productivity of labour and capital, and thereby affect economic growth adversely. The results also illustrate that the debt service ratio tends to negatively affect GDP and the rate of economic growth in the long-run, which, in turn, reduces the ability of the country to service its debt. Similarly, the estimated error correction term shows the existence of a significant long-run causal relationship among the specified variables. Overall, the results suggest the existence of short-run and long-run causal relationships running from debt service to GDP.

Identiferoai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:ufh/vital:11477
Date January 2013
CreatorsShayanewako, V B
PublisherUniversity of Fort Hare, Faculty of Management & Commerce
Source SetsSouth African National ETD Portal
LanguageEnglish
Detected LanguageEnglish
TypeThesis, Masters, M Com
Format104 leaves; 30 cm, pdf
RightsUniversity of Fort Hare

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