Abstract
Starting with overview of existing approaches to meaning and use of the terms the paper focuses on analysis of two indicators vital in any economy – debt and investments. It discusses the differences of sovereign and country debts as well as internal and external debts. Public debt is important indicator for government performance evaluation but outcome and impact of total external debt should be on focus too for sustainable growth of any country. The article discusses the results of analysis conducted with regard to the gross public debt, gross external debt by sectors. Further analysis is focused on Foreign Direct Investment and External Debt stocks of the selected countries which are from developing and emerging economies. Empirical analysis of external debt and foreign direct investments of Kazakhstan is carried out as of the country which leads the list of Foreign Direct Investment related component of the external debt. We discuss the important factors to be further investigated with regard to debt management and investment policy of a country.
Highlights
When used correctly, public debt improves the standard of living in a country
For the thorough analysis of the external debt impact to economy the countries’ data should be carefully selected with the clear borders of the public and private sectors as well as with the internal and external components of the debt. Debt as “flow of money” not in any way belonging to capital or any other contribution could be compared to “capital flow”, i.e. investments for assessment of its impact to economy
Foreign direct investment may contribute to growth if it is an economic investment
Summary
That's because it allows the government to build new roads and bridges, improve education and job training, and provide pensions This spurs citizens to spend more instead of saving for retirement. Debt may be there in a result of investment decision, cash flow management problems and/or extraordinary events what may impact on a country’s performance Nations finance their debt through bonds or can take on loans directly from banks, private businesses or individuals. That makes the components of economic expansion, such as housing, business growth, and auto loans, more expensive To avoid this burden, governments must be careful to find that effective “point” of public debt. Increase in government spending, which, through budget deficit, gets added to the debt contributes to a growing economy as well as foreign direct investments (FDI), which, in principle, should contribute to investment and growth in host countries
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