The effects of debt dependence on economic growth in less-developed countries, 1990–2019

Abstract

Recent years have witnessed a dramatic increase in debt servicing for developing countries. Drawing on the theoretical insights of dependency theory, I investigate the relationship between debt dependence and economic growth in less-developed countries. Results from two-way fixed effects estimation of an expansive country-level dataset on 103 less-developed countries from 1990 to 2019 indicate that debt dependence exerts a harmful effect on economic growth, net of relevant statistical controls. I conclude by discussing the theoretical and policy implications of the empirical analyses.