Foreign Debt and Economic Growth : A Case Study of 9 Selected Countries 2000-2017

Fredericus Adrian Satria Prasetyo; Akhmad Syakir Kurnia

doi:10.14710/jedsr.v1i1.12545

DOI: https://doi.org/10.14710/jedsr.v1i1.12545

Foreign Debt and Economic Growth : A Case Study of 9 Selected Countries 2000-2017

Fredericus Adrian Satria Prasetyo - Departemen IESP Fakultas Ekonomika dan Bisnis Universitas Diponegoro, Indonesia

*Akhmad Syakir Kurnia - Fakultas Ekonomika dan Bisnis Universitas Diponegoro, Indonesia

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Abstract

Limited capital becomes a problem for a country, causing a foreign debt policy crisis to close the existing savings gap. This study aims to see the impact of foreign debt in boosting economic growth in the nine selected ASEAN countries. The data used is secondary data obtained from the Asian Development Bank and the World Bank, covering 9 ASEAN countries in the 2000-2017 period. This study uses the unbalanced panel data method with a fixed effect model to determine the effect in each country. The results show that foreign debt as a cover for the savings gap is able to stimulate economic growth both directly and through domestic savings channels and population growth. Meanwhile, a high level of domestic saving becomes an obstacle to economic growth, as well as population growth which turns out to be an obstacle to economic growth.

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Keywords: External Debt, Economic Growth, unbalanced panel data, fixed effects model

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In Vol 1, No 1 (2021): June

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