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The Impact of Foreign Debt on Economic Growth in Malawi
Author(s) -
Tchereni B.H.M.,
Sekhampu T.J.,
Ndovi R.F.
Publication year - 2013
Publication title -
african development review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.654
H-Index - 32
eISSN - 1467-8268
pISSN - 1017-6772
DOI - 10.1111/j.1467-8268.2013.12015.x
Subject(s) - economics , inflation (cosmology) , external debt , debt , monetary economics , foreign direct investment , exchange rate , interest rate , incentive , variable (mathematics) , foreign exchange reserves , variables , central bank , macroeconomics , international economics , monetary policy , market economy , mathematical analysis , physics , mathematics , machine learning , theoretical physics , computer science
This study analysed the impact of foreign debt on economic growth in Malawi using time series. Data for the period 1975–2003 from the Reserve Bank of Malawi, the IMF and the National Statistical Office was regressed in basic time series analysis. The dependent variable was economic growth and independent variables included level of foreign debt as the main variable. Other variables considered are the inflation rate, exchange rate and the prime lending rate, private and public investment. The results show a statistically insignificant and negative relationship between foreign debt and economic growth for the case of Malawi. The country should strive to provide incentives to local manufacturers who would want to export rather than relying on borrowing for growth inducement. Of interest was the relationship between inflation and economic growth which was positive.