Basic Transfer Concept and External Debt Thresholds Measures of Selected South Asian Economies

Abstract

The core objective of this paper is to estimate the basic transfer equation for the selected South Asian economies, Pakistan, India, Bangladesh and Sri Lanka. Debt crises all over the world stems from the basic transfer concept. To estimate the basic transfer Generalized Methods of Moments technique is applied which indicates that South Asian economies are still away from the default risk associated with external debt. By applying the Ordinary Least Square technique threshold levels of external debt are estimated for each economy separately which are also viable with the finding s of basic transfer which further implies that each economy can opt more for foreign assistance for the sustainable economic growth. It is also recommended that despite the below the threshold level, each economy has to properly channelize the domestic resources and foreign debt must be deployed in lucrative and export-oriented investment for further sustainability.