Gross Domestic Product Growth Research Articles

Assessing the Impact of Inflation and Exchange Rate on Nigerian Gross Domestic Product (1981-2022)

This study evaluated the impact of inflation and exchange rate on the Nigerian Gross Domestic Product (GDP) from 1981 to 2022. The data for this study were obtained from Central Bank of Nigeria Statistical Bulletin. Multiple Linear Regression model was adopted for the study to determine the relationship between the GDP, the inflation and exchange rates and the result showed that there is a significant relationship with the p-value (0.005). The result also showed with Ordinary Least Square (OLS) method that inflation rate has a negative impact on the Nigerian GDP while exchange rate is significant with (p-value <0,005) over the years of study. The value of the coefficient of variation R2 for this research is 92.2% indicating that inflation and exchange rate account for about 92% of the variation in the GDP over the years of study. It was observed there was an increase in exchange rate and price level is also detrimental to the economic growth, this means it contributes to the growth of Nigerian GDP over the period of study.

Impact of tariff liberalization on economic and social benefits: Computable general equilibrium application to Kenya

AbstractThis study employed computable general equilibrium policy simulations to examine the impact of import tariff liberalization on socioeconomic outcomes including living standards, cost of living, gross domestic product (GDP) from expenditure, total investment expenditure, intermediate input demand, output, value‐added, tariff revenue, sales tax revenue, indirect tax revenue, direct income tax revenue, factor income tax revenue, and factor demand. Findings from the simulations have policy implications touching on a need to embrace reciprocal tariff liberalization under agreements like strategic trade and investment partnerships and economic partnership agreements as they are associated with welfare gains, reduction in cost of living, and GDP growth. Targeted policy incentives could be directed to specific domestic sectors since tariff liberalization has negative impacts on investment expenditure. Incentives regarding intermediate inputs should be directed to the manufacturing and services sectors for liberalization of agrifood commodities. Targeted policy incentives should be directed to the manufacturing and services sectors which experience decrease in output with tariff reductions. Liberalization of manufactured commodities should be accompanied by value‐added incentives directed to the agrifood and home production–home consumption sectors. For the liberalization of manufactured commodities, targeted policy incentives should be directed to the services sector which experiences job losses while for the liberalization of tariffs on imports of agrifood commodities, targeted policy incentives should be directed to the agrifood and the home production–home consumption sectors, which also lose jobs. These targeted policy incentives could support industrial activity and compensate for revenue loss, especially from customs duties.Related ArticlesGruber, Lloyd. 2013. “Trade, Growth, Poverty, and Politics: Toward a Unified Theory.” Politics & Policy 41(5): 723–64. https://doi.org/10.1111/polp.12034.Onyango, Gedion, and Japheth Otieno Ondiek. 2022. “Open Innovation During the COVID‐19 Pandemic Policy Responses in South Africa and Kenya.” Politics & Policy 50(5): 1008–31. https://doi.org/10.1111/polp.12490.Soto, Gloria. 2012. “Environmental Impact of Agricultural Trade Liberalization under NAFTA.” Politics & Policy 40(3): 471–91. https://doi.org/10.1111/j.1747‐1346.2012.00354.x.

Role of Economic Expansion, Energy Utilization and Urbanization on Climate Change in Egypt based on Artificial Intelligence

This study employs machine-learning algorithms (ML), specifically Random Forest (RF) and Gradient Boosting (GB), to assess the impact of various factors, including Gross Domestic Product (GDP) growth, urbanization, and energy consumption, on carbon dioxide emissions (CO2). The research underscores the RF algorithm's superior accuracy in determining independent variables' influence on CO2 emissions compared to GB. Furthermore, the study reveals that natural gas is the most significant contributor to CO2 emissions in Egypt, accounting for 49.7% of the total, followed closely by oil at 46.7%. The effect of other variables on CO2 emissions is relatively minimal. The findings also establish a strong positive correlation between the consumption of natural gas, oil, and coal and CO2 emissions in Egypt. Additionally, a negative relationship is observed between GDP growth, suggesting a positive trend in environmentally friendly economic expansion and urbanization on CO2 emissions in Egypt. This unique scenario, where urban expansion appears to have an inverse relationship with CO2 emissions, sets Egypt apart from many other countries and signifies a favorable environmental outcome.

The Impact of Fossil Fuel Energy, Technological Innovation and Globalization on Tourism Inflows of Top Ten Most Visited Countries

Increased uses of fossil fuel consumption, globalization, and tourism activities have significant adverse effects on the sustainability of our ecosystem. The present study takes into account the top 10 most visited nations by tourists to examine the impact of fossil fuel energy consumption, technological innovation, foreign direct investment (FDI), economic growth, and globalization on tourism inflows from 2008 to 2022.. Choice of appropriate technique for empirical testing is based on the PP-Fisher, ADF Fisher, IPS, and LLC unit root tests. Due to mixed order of integration of variables, the Panel ARDL is more reliable for econometric investigation. The findings of Panel ARDL reveal that the most significant contributing factors towards growth in tourism are technological innovation, the globalization index, growth in gross domestic product, and use of fossil fuels as an energy source. These results imply that advancements in technology, increased globalization trends, and economic growth are facilitating the growth in tourism activities. Likewise, non-renewable energy consumption is significantly linked to tourism growth in these countries which exhibits that these governments are relying upon fossil fuel consumption to meet the energy demand for tourism activities and to fuel economic growth. Though, FDI is having a detrimental effect on tourism inflows in the top 10 most frequently visited nations. This outcome entails that expanded industrialization and economic footprint negatively influence the ecological environment which adversely affects tourism inflows. The policy implications of this research assert that the development of clean and renewable energy technologies is essential for the promotion of sustainable economic growth, promote eco-tourism in these countries. Similarly, smart manufacturing and environment friendly production can alleviate the negative effects of ecological footprint on tourism inflows.

Foreign Direct Investment and Economic Development: An International Perspective

Abstract The present study examines the patterns of foreign direct investment (FDI) in Kazakhstan and draws comparisons with global trends. Based on statistical data spanning from 2000 to 2022, the study reveals that the growth of FDI in Kazakhstan has exhibited greater volatility and speed compared to developed nations. However, it is strongly associated with global FDI inflows and the growth of gross domestic product (GDP). This article aims to examine the patterns and determinants influencing FDI in Kazakhstan and to juxtapose these patterns with global trends. The main approach used in the study was systematic. The article’s contribution lies in its provision of novel insights into the dynamics of FDI in Kazakhstan and its correlation with economic growth. Furthermore, the article elucidates the various factors that contribute to the expansion of FDI in Kazakhstan, while also offering suggestions for the development of public policy in this domain. The article provides a comprehensive examination of FDI patterns in Kazakhstan, comparing them to global trends and identifying the factors that influence the dynamics of FDI. Furthermore, the article offers suggestions for expanding the economic base of Kazakhstan beyond its reliance on the oil and gas industry, enhancing focus on high-tech and innovative sectors, and enhancing the institutional framework.

The finance and growth nexus revisited: a truly Schumpeterian perspective

Abstract The nexus between the financial system and economic development is an issue that is as important for economic theory as it is for economic policy. This article provides a theoretical and empirical analysis of the standard literature that uses Joseph A. Schumpeter as an academic patron. The starting point of our study is the theoretical finding that Schumpeter is misinterpreted in the finance and growth literature. We show that this leads to puzzling empirical results and difficulties in explaining even fundamental relationships. After a critical analysis of the literature, we provide our own empirical analysis using a panel of 43 countries to explore the relationships between finance and growth variables based on a truly Schumpeterian and thus monetary growth model. Our empirical analysis shows that (i) dynamic credit variables are better at describing the finance and growth nexus than static credit variables, (ii) as saving is not a prerequisite for credit, we do not find a statistically significant relationship between household saving and gross domestic product (GDP) growth, and (iii) in line with the empirical literature, we find a bi-directional relationship between credit and GDP growth.

Determinant on Economic Growth in Developing Country: A Special Case Regarding Turkey and Bangladesh

AbstractThis study delves into the complex interplay between gross domestic product (GDP) and key macroeconomic indicators in the contexts of Turkey and Bangladesh. By examining panel data spanning from 1981 to 2020 sourced from the World Bank, we investigate the causal relationships between GDP growth and various factors including population growth, inflation, literacy rate, natural resource utilization, investment, and foreign direct investment (FDI). Our research aims to address critical questions regarding the economic trajectories of these two emerging economies. Specifically, we seek to understand how different macroeconomic variables influence GDP growth in Bangladesh and Turkey, while also exploring the unique socio-economic landscapes of these nations. Methodologically, we employ the Dumitrescu–Hurlin panel causality test to analyze the causal relationships between GDP growth and the aforementioned macroeconomic indicators. Our findings reveal direct, statistically significant associations between GDP growth and these variables, with population growth emerging as a particularly influential factor. The implications of our study extend beyond empirical observations, offering valuable insights for policymakers and stakeholders seeking to foster sustainable economic development in both Bangladesh and Turkey. By identifying the key drivers of GDP growth and their impact on economic performance, our research contributes to the existing body of literature on economic development in emerging economies. In conclusion, this study sheds light on the intricate dynamics of GDP growth in Turkey and Bangladesh, highlighting the importance of understanding and leveraging macroeconomic indicators to promote inclusive and sustainable economic growth in these nations.

Toward a just circular economy: conceptualizing environmental labor and gender justice in circularity studies

Over the past decade, the concept of circular economy (CE) has gained political traction as a potential solution to economy-environment tradeoffs. However, critical social scientists have raised concerns that CE may not address the root causes or consequences of environmental degradation, thus remaining ineffective. Concurring with this critique, this article highlights three constituent elements of the linear economy that remain unaddressed in CE frameworks: environmental, labor, and gender inequalities. Building upon scholarship from environmental justice, environmental labor studies, and feminist ecological economics, we elaborate a conceptual framework to interrogate the existing literature. Our analysis shows that current CE models 1) are mainly concerned with return on capital investment and sustained growth of gross domestic product (GDP) rather than with redressing the North/South inequalities embedded in the linear economy model; 2) present a limited perspective on labor, with a primary focus on the number of jobs to be created, rather than their quality, or workers’ leadership; and 3) overlook gender inequalities and the sexual division of labor, thus reproducing the devaluation of care that lays at the roots of socioecological crises. We conclude by suggesting avenues for elaborating a “just circular economy” framework.

Determining the Future Direction and Amount of Tax Revenue in Indonesia Using an <i>Error Correction Model </i>(ECM)

The characteristics of how tax revenues, as well as the macroeconomic factors that are expected to influence and determine tax revenues, develop have become the basic macroeconomic assumptions by the government in compiling various components of the posture of the state revenue and expenditure budget to maintain and increase the expected economic growth. To understand the evolution of tax revenues and the impacts of these variables, it is important to investigate the relationship between tax revenues and specific macroeconomic variables. This study aims to identify the effect of macroeconomic variables on Indonesian tax revenues in the long and short term using multiple regression analysis in an error correction model (ECM). The macroeconomic conditions and variables used in this study are gross domestic product (GDP), inflation, interest rates, and exchange rates. This study employed the time-series data from 2000–2019. The ECM method was conducted in the following stages: stationarity test, cointegration test, and ECM regression test. The ECM model is declared valid, if the cointegrated variables are supported by a significant and negative ECT coefficient value. The statistical analysis, i.e. t-statistic, the F-statistic, and the coefficient of determination, were used to evaluate the significance of the ECM model. The results showed that among the four of macroeconomic variables used in this study, GDP has the highest significant effect on the tax revenue. GDP has a highly positive and considerable impact on tax revenue. The increasing of GDP growth is in line with the realization of tax revenue. A strong positive long-term (t-statistic = 13.94075*, P-value = 0.0000) and short-term (t-statistic = 5.515026*, P-value = 0.0001) association is also observed between inflation and tax revenue. Inflation has a favorable and considerable impact on tax income either in long (t-statistic = 2.298586**, P-value= 0.0363) or short term (t-statistic = 2.515695**, P-value = 0.0258). On the other hand, Bank Indonesia interest rate has a negative insignificant effect (t-statistic = −1.542970ᵈ, P-value = 0.1437) in the long run on tax revenue. However, it has a negative significant effect (t-statistic = −2.699231**, P-value = 0.0182) in short-term tax revenue. A rise in interest rates results in the lowered tax revenues due to the reduction of public consumption patterns, and a decrease in public consumption. The exchange rate has a negative negligible connection in long term (t-statistic = −1.045768ᵈ, P-value = 0.3122), as well as in short term (t-statistic = 1.250076ᵈ, P-value = 0.2333) with tax revenue, meaning that tax revenue is not significantly affected by changes in exchange rate. In conclusion, total tax revenues and the four macroeconomic variables have a significant long- and short-term association according to the ECM analysis with an adjusted R² value of 0.985866 and 0.792880, respectively. Changes in future tax revenues are largely determined by the stability of macroeconomic variables. Therefore, it is highly recommended that the government maintain the stability of macroeconomic variables, especially GDP, because GDP has a dominant influence on tax revenues in the long and short term so that the target of tax revenues can be achieved. The ECM analysis applied in this study can explain the effect of changes in macroeconomic variables on the tax revenue in the short and long term; so that the future direction and amount of tax revenue can be determined in preparing the State Budget and projecting the expected level of economic activity growth in a nation.

IMPACT OF THE BRICS ON THE RUSSIAN ECONOMY AND TRADE

This study explores the influence of the BRICS nations on the Russian economy, with a specific focus on trade dynamics and their impact on Russia's Gross Domestic Product (GDP) growth. Through a comprehensive analysis spanning from 2011 to 2022, this study delves into the volume of trade between Russia and each BRICS country, assessing the stability, trends, and sectoral composition of these trade relationships. The study utilizes regression analysis to evaluate the correlation between Russia's economic indicators and its trade activity within the BRICS framework. The findings indicate a significant impact of trade with BRICS countries on Russia's economic performance, particularly highlighting the role of exports and imports in driving GDP growth. The research also forecasts Russia's GDP from 2023 to 2025, providing insights into the potential future economic trajectory based on trade patterns with BRICS nations. This study contributes to understanding the strategic importance of the BRICS alliance for Russia's economic landscape, suggesting that continued and diversified trade relations within this group could be key to Russia's economic prosperity.

The Contribution of Sustainable Tourism to Economic Growth and Employment in Kazakhstan

In the global economy, tourism stands out as a prominent and expanding sector, playing a pivotal role in enhancing a nation's economic prospects. The surge in tourism has the potential to yield positive economic outcomes, particularly in gross domestic product (GDP) and employment opportunities. Within Central Asian countries, the tourism industry serves as a catalyst for economic development and GDP growth, with Kazakhstan being a focal point. This research delves into the impact of tourism on Kazakhstan's economic growth and employment during the period from 2015 to 2023. Augmented Dickey–Fuller and Phillips–Perron unit root tests were conducted to assess the stationarity of variables. Utilizing regression techniques and the Johansen cointegration approach, the analysis reveals a significant and positive correlation between tourism, economic growth, and the employment sector in Kazakhstan. The study underscores the importance of formulating policies that promote tourism throughout the country, suggesting that policymakers should concentrate on strategies harnessing the immense potential of the tourism sector. The findings of this research offer valuable policy implications and avenues for future exploration.

Resource curse in OPEC with varied levels of financial regulations and constraints: The role of oil price shocks and digital finance

Economic growth and development are crucial for global economies, and a nation's physical, human, and natural resources significantly impact its trajectory. Natural resource-rich nations can benefit or face the resource curse. Henceforth, this study examines the economic growth of Organization of the Petroleum Exporting Countries (OPEC), considering digital finance, financial regulations, and oil price shocks. Understanding the intricate relationship between oil price fluctuations and digital finance within diverse financial regulatory frameworks is essential for a comprehensive grasp of the resource curse in OPEC. The research employed a bias-corrected dynamic panel and MMQR model to analyze datasets from 2004 to 2022. The study reveals that Oil price shocks have led to higher economic growth when there are moderate financial constraints. However, they have a detrimental effect when the financial system is either very constrained or highly unconstrained. Digital finance has been shown to enhance Gross Domestic Product (GDP) across various levels of financial regulations. The GDP of OPEC experiences a significant adverse effect when digital finance and oil price shocks are coupled, particularly in the presence of stringent financial rules. This outcome is mainly attributed to the adverse influence of oil prices. The findings above underscore the need for moderate levels of financial regulations that support the favorable influence of oil prices and digital finance on GDP. The study additionally suggests a prospective strategy for enhancing GDP growth in OPEC nations: facilitating digital finance.

Does digital financial inclusion forecast sustainable economic growth? Evidence from an emerging economy

The emergence of digital financial inclusion has initiated a debate about whether it is the next frontier of sustainable economic growth, especially for developing economies. This study aims to verify these contentions by examining the impact of digital financial inclusion on sustainable economic growth. Accordingly, we created automated teller machines and debit card holders (Debit) as the proxies of digital financial inclusion and examined their impact on sustainable economic growth through the proxies of gross domestic product (GDP) growth and carbon dioxide (CO2) emissions. The empirical data between 2011 and 2020 was retrieved from Indonesia and was analyzed using the generalized method of movements (GMM) technique. The findings confirm that digital financial inclusion’s proxies (automated teller machines and Debit) have a significant positive (strong) effect on GDP growth and a significant positive (moderate) effect on CO2 emissions. This study may motivate developing countries to accelerate their digital financial inclusion initiatives to achieve sustainable economic growth.

Clustering the countries of the Asia-Pacific by values of inclusive economic growth

   The experience of development banks has led to the conclusion that they directly affect economic growth: projects implementation ensures production of goods and services, creates new workplaces. The growth of gross domestic product is not always inclusive and does not guarantee equal accessibility of all segments of the population to economic opportunities, education, health care, etc. on a constant basis. The Asian Development Bank (hereinafter referred to as the Bank) purposefully influences inclusive economic growth (hereinafter referred to as IEG) in the countries of the Asia-Pacific (hereinafter referred to as APAC) with the help of its own IEG model and allows assessing public administration, economic growth, social support, using 35 indicators, which contributes to reduction of poverty and inequality. For each country the Bank develops its own strategy of cooperation. The authors conducted a hier-archical clustering of the APAC countries based on the values of 24 IEG indicators of the Bank (for two datasets). The APAC countries in each cluster are characterised by approximately the same general level of IEG. The clustering model provides an opportunity to plan projects and assess their influence on IEG, excludes disadvantages of the so-called composite indices that could describe the IEG of a country or region with one value, compensates potential inaccuracies of the basic data.

Synergistic role of agriculture production, fertilizer use, tourism, and renewable energy on CO2 emissions in South Asia: A static and dynamic analysis

The most crucial industries for growth, particularly in developing countries, are agriculture, tourism, and the fertilizer industry. These businesses are also linked to environmental deterioration. The current study uses empirical research to inspect the links between carbon dioxide (CO2) secretions and Gross Domestic Product (GDP) progression, government expenditure, tourism, fertilizer usage, renewable and non-renewable energies, and agricultural production. Information commencing from six South Asian nations is used to produce the findings between 1991 and 2019. Following the establishment of stationary and cointegration, a static analysis using a Fixed Effect and Random Effect Model and a dynamic analysis using a One Step Difference and System GMM (Generalized Method of Moments) are performed. This article employs Mean Group (MG) and Augmented Mean Group (AMG) approaches to increase robustness, while multicollinearity, heteroscedasticity, autocorrelation, and Cross-Sectional Dependency (CSD) are used for post-estimation. According to the study, the selected South Asian region's agricultural, fertilizer use, non-renewable energy use, tourism, GDP growth, and government spending all result in a rise in CO2 emissions, while using clean energy reduces those emissions and is crucial to reducing those emissions. The study offers some policy ramifications concerning green farming and tourism.

Presence of Debt Overhung Effect in Pakistan: Empirical Evidence with ARDL Model

Many developing nations, including Pakistan, have struggled with the challenge of maintaining debt sustainability due to insufficient revenue generation to meet economic crises. The primary aim of this study is to find how external debt, debt servicing, and exports influence the economic growth of Pakistan, utilizing data from 2000 to 2020. Augmented Dickey-Fuller test (ADF) is applied to evade spurious regression, revealing that debt servicing is stationary at level. In contrast, GDP, external debt, and exports are stationary at their first difference. For this reason, the ARDL model has been used to find the long-run and short-run interdependence among external debt, debt servicing, exports, and GDP. The empirical findings of this study revealed a negative and significant impact of external debt on Gross Domestic Product (GDP), supported by the “Debt Overhung Effect”. Conversely, debt servicing has a positive but statistically insignificant impact on GDP. Exports have a positive and significant impact on GDP growth. Moreover, to confirm the long-term stability of our model Cumulative Sum of Recursive Residual (CUSUM) and CUSUM of square have been used. This research contributes novel insights to the work conducted by other researchers, shedding light on the intricate relationship among external debt, debt servicing, exports, and GDP growth of Pakistan. Additionally, by estimating the effect of exports on GDP, valuable insights into the country's debt repayment capacity are provided. Export earnings constitute a primary source of foreign currency inflow.

MONETARY POLICY DYNAMICS AND ECONOMIC PERFORMANCE IN BANGLADESH: AN ARIMA MODEL APPROACH

This study delves into the impact of monetary policy on the economic performance of Bangladesh, utilizing data derived from audited annual reports of the Bangladesh Bank covering the years 2014 to 2022. The central focus of the analysis revolves around Gross Domestic Product (GDP) as the dependent variable, with money supply growth, real interest rate, exchange rate, inflation rate, and repo rate considered as independent variables. Employing two regression models, namely Ordinary Least Squares (OLS) and Autoregressive Integrated Moving Average (ARIMA), the research aims to explore the relationships among these variables. In the OLS regression model, significant associations are identified between GDP and real interest rates, inflation rate, and the repo rate. However, no statistically significant relationships are observed between GDP and money supply growth or the exchange rate. On the contrary, the ARIMA regression model indicates statistical significance for all variables, except the exchange rate, concerning their impact on GDP. These findings suggest that monetary policy plays a substantial role in shaping the economic growth of Bangladesh, with real interest rates, inflation rates, and repo rates exerting particular influence. The lack of a significant relationship between the exchange rate and GDP in the ARIMA model implies that other factors, potentially external to the country, may have a more dominant influence on exchange rate dynamics during the study period. This research contributes to a deeper understanding of the complex interplay between monetary policy and economic performance in Bangladesh, offering valuable insights for policymakers and stakeholders.

Atmospheric microplastic deposition associated with GDP and population growth: Insights from megacities in northern China

Microplastic (MP) pollution is evolving into one of the most pressing environmental concerns worldwide. This study assessed the impact of economic activities on atmospheric MP pollution across 17 megacities in northern China, analyzing the correlation between the deposition flux of atmospheric MPs and variables such as city population, gross domestic product (GDP), and industrial structure. The results have shown that the MP pollution is obviously impacted by human activities related to increased GDP, population, as well as tertiary service sector, in which the MP pollution shows most close relationship with the GDP growth. Polypropylene, polyamide, polyurethane, and polyethylene were identified as the primary components of atmospheric MPs. The average particle size of MPs in atmospheric dustfall is 78.3 µm, and the frequency of MP particles increases as the particle size decreases. The findings highlight the complex relationship between socio-economic development and atmospheric MP accumulation, providing essential insights for the formulation of targeted emission reduction strategies.

The asymmetric impact of government expenditure on economic growth: Evidence from a NARDL model

Since the 2011 Revolution, Tunisia has faced significant economic development challenges. Government spending plays a crucial role in fostering economic growth. This study focuses on Tunisia from 1980 to 2022, considering factors like foreign direct investment (FDI), trade openness, capital, and labor. It particularly examines spending in four government sectors: agriculture, education, health, and military. Using the Non-linear Autoregressive Distributed Lag (NARDL) model, the study investigates how these sectoral government expenditures relate to Tunisia's gross domestic product (GDP). The findings suggest that the relationship between these factors and GDP is complex. For instance, increases in trade openness and FDI generally lead to GDP growth. Similarly, changes in the labor force impact GDP differently in the short and long term, with negative and positive changes eventually benefiting the economy, but positive changes can initially decrease GDP. The study also finds that government spending on agriculture and health positively affects GDP, whereas spending on military and education has a negative impact. To enhance government spending and stimulate economic growth in Tunisia, the study recommends addressing corruption, inefficiency, and waste. It emphasizes the importance of directing public funds towards infrastructure, particularly in the education and military sectors, to improve welfare and support productive activities.

From Debt Trap to Economic Prosperity: Solow Model Analysis of the Impact of External Debt on Indonesia's Growth

Indonesia, like many developing countries, has been grappling with the issue of external debt. This study uses the Solow Growth Model approach to examine the relationship between external debt and economic growth in Indonesia. The study utilizes time-series data from 1970 to 2022. It includes Gross Domestic Product (GDP) as the dependent variable, while Debt Service, External Debt, Exports, Imports, Gross Capital Formation, and Population Growth are the independent variables. The ARDL method is used to analyse the data to determine whether there is a statistically significant relationship between the independent and dependent variables. The findings of this study reveal that External Debt, Debt Service, Exports, Imports, and Gross Capital Formation have a significant positive relationship with GDP, indicating that increased external debt can contribute to economic growth in the country. This suggests that the government can use external borrowing to increase investments, exports, and imports and ultimately drive GDP growth. These results have important implications for policymakers looking for strategies to promote economic growth in Indonesia. By focusing on measures that stimulate foreign investment, increase exports and imports, and enhance gross capital formation, policymakers can help the country move from a debt trap to economic prosperity. Using the Solow Growth Model approach, this study also provides a framework for other developing countries to examine the relationship between external debt and economic growth.