The Impact of External Indebtedness on Poverty in Low-Income Countries
26 Pages Posted: 28 Jan 2006
Date Written: March 2003
Abstract
This paper explores the relationship between external debt and poverty. A number of observers have argued that high external indebtedness is a major cause of poverty, Using the first-differenced general method of moments (GMM) estimator, the paper models the impact of external debt on poverty, measured by life expectancy, infant mortality, and gross primary enrollment rates, while duly taking into account the impact of external debt on income. The paper thus endeavors to bring together the literature that links external debt with income growth and poverty. The main conclusion is that once the effect of income on poverty has been taken into account, external indebtedness indicators have a limited but important impact on poverty.
Keywords: Poverty, Growth, External Debt
JEL Classification: I3, N1, F34
Suggested Citation: Suggested Citation
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