External Debt, Capital Expenditure and Economic Growth in Sub-saharan Africa

Abstract

ABSTRACT This study examined the joint effects of external debt and capital expenditure on economic growth. Using panel data of 37 SSA countries for the period of 2000–2020, the study found a negative relationship between external debt and economic growth, capital expenditure and economic growth, but a positive effect of the interaction between external debt and capital expenditure on economic growth. Therefore, the study recommended that externally borrowed funds by countries in SSA should be invested in productive ventures with prudent management to ensure economic growth and development. More importantly, governments of SSA should utilise fiscal and monetary policy efficiently to ameliorate the over dependence on external borrowings in financing their economic activities