Government Borrowing, Infrastructure, Human Development and Economic Growth in Africa: A Panel Threshold Approach
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Date
2021
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Abstract
In this paper, we examined the effect of external borrowing on infrastructure, human development
and economic growth in Africa. Using the panel threshold regression, we explored whether the
threshold effect that often characterize the debt-growth nexus also applies to key drivers of
economic growth, inequality and sustainable development such as infrastructure and human
development. Data for the study covered the period 1990 to 2019 for 49 countries in Africa.
Findings showed non-existence of a threshold effect between external public debt and
infrastructure as well as human development. Finding from the fixed effects model for
infrastructure and HDI showed insignificant effect of external borrowing on the index of
infrastructure and significant negative effect on human development. The result support literature
evidence of a threshold effect between borrowing and economic growth. Findings suggest less
allocation of borrowed funds to improvement in infrastructure and use of deficit financing in areas
that are not targeted at improving human devilment. Policy directive in this regard has implication
for income potential, debt repayment and sustainable development.
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Government Borrowing, Human Development, Economic Growth
Citation
iii. Osakede U.A., Adeleke O.K. (2022). Government Borrowing, Infrastructure and Human Development in Africa: A Panel Threshold Approach. In: Antoniades A., Antonarakis A.S., Kempf I. (eds) Financial Crises, Poverty and Environmental Sustainability: Challenges in the Context of the SDGs and Covid-19 Recovery. Sustainable Development Goals Series. Springer, Cham. https://doi.org/10.1007/978-3-030-87417-9_6