Research and Writings

Rajib Hassan (2019) The Role of External Debt on Economic Growth: An Econometric Analysis on Bangladesh, Ma. Diss., Pathum Thani: Asian Institute of Technology.

October 3, 2019

Abstract: Bangladesh want to be developed country by 2041. To be developed the government has initiated many development works and most of this development work is financed by external debt. External debt represents the amount a country (both public and private sector) owed to other countries or to international institutions. This study is conducted to find out the short run and long run effect of external debt on economic development of Bangladesh and this study use the yearly data from 1975 to 2017 collected from World Bank: WDI data series. Before conducting different statistical test, a sequence of time series data property test has been conducted. The OLS methods signifies that in short run external debt stock have negative effect on the economic development of Bangladesh. But, the Johansen cointegration test validate that external debt has long run positive relation with GDP of Bangladesh. Moreover, the pairwise Granger Causality Test confirmed that external debt has no direct causal relationship with GDP, but GDP has direct causal relationship with external debt. In addition to contributing to the existing literature, this study can provide a useful thought about making policy regarding efficient uses of external debt.