Can Debt Relief Buy Growth?
Fordham University - Fordham College at Rose Hill
August 27, 2005
The purpose of the paper is twofold. First, I investigate whether numerous debt initiatives during the 1980s and 1990s have had a significant effect on economic growth rates in developing countries in general. The major initiatives during that time period were negotiated as bilateral agreements under the guidance of the Paris Club of Creditors. These agreements were complemented later on by the Heavily Indebted Poor Countries (HIPC) debt relief initiative in 1996 and its "enhanced" version in 1999. I find that, on average, debt relief has no effect on growth rates of developing countries. The second question I address in this paper is whether the effect on growth rates was different for different subsets of developing countries. I find that countries that are not classified as HIPC have benefited significantly from debt relief, whereas the growth rates of HIPC countries have been unaffected.
Number of Pages in PDF File: 35
Keywords: HIPC debt initiative, foreign aid, growth
JEL Classification: F42, F43, O19working papers series
Date posted: October 13, 2005
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