External debts as panacea to economic growth challenges in selected Eastern African countries: An application of the autoregressive distributed lag mode
Foreign aid has significantly influenced medium- and long-term development initiatives in Eastern African countries. Project aid and non-project aid are the two main categories that describe foreign economic assistance (loans, credits, and grants). The primary aim of foreign aid has been to supplem...
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Science Mundi
2024
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| author | Utouh, Harold M.L. Tile, Augustino Sesabo, Jennifer Kasanda |
| author_facet | Utouh, Harold M.L. Tile, Augustino Sesabo, Jennifer Kasanda |
| author_sort | Utouh, Harold M.L. |
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| description | Foreign aid has significantly influenced medium- and long-term development initiatives in Eastern African countries. Project aid and non-project aid are the two main categories that describe foreign economic assistance (loans, credits, and grants). The
primary aim of foreign aid has been to supplement the internal resources needed to quicken the economic development of the
nations in Eastern Africa. This study investigated the influence of external debt on the economic growth of Eastern African
countries (Kenya, Uganda, Rwanda, Burundi, and Tanzania) using the autoregressive distributive lag mode and panel data
(1970–2020). The findings revealed that external debt had a significant adverse effect on economic growth. In Burundi, an
increase in external debt reduces GDP by 5% in the short run, while in the long run, it reduces GDP by 19%; in Tanzania, it
decreases GDP by 22%; and in Kenya, it reduces the GDP by 13%. Conversely, the findings indicated that the increased level of
external debt positively influenced Uganda's GDP (0.03%) but was not statistically significant. Therefore, it is recommended that
Eastern African countries source their income, apart from more external concessional debt, through bilateral or multilateral
arrangements to plug into their budget deficits. Also, it is recommended that East African governments develop their external debt
initiatives that offer further profitable investment opportunities to repay their foreign debt gradually. Moreover, strategies in the
East African countries must be geared towards strengthening revenue mobilization to provide avenues to balance their external
debts. For instance, improving the informal sector in these countries is a viable base for increasing revenue through taxes |
| format | Article |
| id | oai:41.59.85.69:123456789-1024 |
| institution | Mzumbe University |
| language | en_US |
| publishDate | 2024 |
| publisher | Science Mundi |
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| spelling | oai:41.59.85.69:123456789-10242024-08-07T07:27:40Z External debts as panacea to economic growth challenges in selected Eastern African countries: An application of the autoregressive distributed lag mode Utouh, Harold M.L. Tile, Augustino Sesabo, Jennifer Kasanda autoregressive distributed lag mode Eastern African Countries External debts - East African Countries Foreign aid neoclassical growth theory Unit Root Test Autoregressive Distributive Lag Eastern African Countries Economic Growth External Debt Foreign aid has significantly influenced medium- and long-term development initiatives in Eastern African countries. Project aid and non-project aid are the two main categories that describe foreign economic assistance (loans, credits, and grants). The primary aim of foreign aid has been to supplement the internal resources needed to quicken the economic development of the nations in Eastern Africa. This study investigated the influence of external debt on the economic growth of Eastern African countries (Kenya, Uganda, Rwanda, Burundi, and Tanzania) using the autoregressive distributive lag mode and panel data (1970–2020). The findings revealed that external debt had a significant adverse effect on economic growth. In Burundi, an increase in external debt reduces GDP by 5% in the short run, while in the long run, it reduces GDP by 19%; in Tanzania, it decreases GDP by 22%; and in Kenya, it reduces the GDP by 13%. Conversely, the findings indicated that the increased level of external debt positively influenced Uganda's GDP (0.03%) but was not statistically significant. Therefore, it is recommended that Eastern African countries source their income, apart from more external concessional debt, through bilateral or multilateral arrangements to plug into their budget deficits. Also, it is recommended that East African governments develop their external debt initiatives that offer further profitable investment opportunities to repay their foreign debt gradually. Moreover, strategies in the East African countries must be geared towards strengthening revenue mobilization to provide avenues to balance their external debts. For instance, improving the informal sector in these countries is a viable base for increasing revenue through taxes 2024-08-07T07:27:37Z 2024-08-07T07:27:37Z 2024 Article APA ISSN: 2788-5844 http://sciencemundi.net/ https://scholar.mzumbe.ac.tz/handle/123456789/1024 en_US application/pdf Science Mundi |
| spellingShingle | autoregressive distributed lag mode Eastern African Countries External debts - East African Countries Foreign aid neoclassical growth theory Unit Root Test Autoregressive Distributive Lag Eastern African Countries Economic Growth External Debt Utouh, Harold M.L. Tile, Augustino Sesabo, Jennifer Kasanda External debts as panacea to economic growth challenges in selected Eastern African countries: An application of the autoregressive distributed lag mode |
| title | External debts as panacea to economic growth challenges in selected Eastern African countries: An application of the autoregressive distributed lag mode |
| title_full | External debts as panacea to economic growth challenges in selected Eastern African countries: An application of the autoregressive distributed lag mode |
| title_fullStr | External debts as panacea to economic growth challenges in selected Eastern African countries: An application of the autoregressive distributed lag mode |
| title_full_unstemmed | External debts as panacea to economic growth challenges in selected Eastern African countries: An application of the autoregressive distributed lag mode |
| title_short | External debts as panacea to economic growth challenges in selected Eastern African countries: An application of the autoregressive distributed lag mode |
| title_sort | external debts as panacea to economic growth challenges in selected eastern african countries an application of the autoregressive distributed lag mode |
| topic | autoregressive distributed lag mode Eastern African Countries External debts - East African Countries Foreign aid neoclassical growth theory Unit Root Test Autoregressive Distributive Lag Eastern African Countries Economic Growth External Debt |
| url | http://sciencemundi.net/ https://scholar.mzumbe.ac.tz/handle/123456789/1024 |
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