African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4138

Article in Press

Economic Analysis of Foreign Debt on Economic Growth in West Africa Countries.

Ekpe, John Polycarp

  •  Received: 20 September 2021
  •  Accepted: 20 September 2021
The study investigates the economic effect of debt on economic growth in West Africa. The main objective was to examine the effect of foreign debt as a means of driving growth using some macroeconomic factors such as total external debt stocks and total debt servicing on the resultant effect of the use of debt to drive economic growth in West Africa. Pie chart and line chart was used to illustrate some average ratio of Gross Domestic Product and the effect of debt on West Africa countries. Ghana had the highest debt profile of $15.8billion, followed by Nigeria with $13.7 billion and Cote d’ivorie with $11.2 billion. The data was extracted from World Development Indicators for the period in which the study covered; and the model specified was estimated using panel data from 2000 to 2016. The result shows that debts do have significant effect on growth in the selected West Africa countries with coefficient of -1.96 and it significant at 5 percent level of significance. The negative sign indicates an inverse relationship; that is, the higher the debt stock, the lower the growth rate. The study recommends that government should concentrate in reducing its borrowing, and also plan more on infrastructural growth, and creating employment opportunities for the masses who are unemployed.

Keywords: Economic Analysis of Foreign Debt; Economic Growth; Gmm Model West Africa Countries