Foreign Debt Growth Research Articles

Дипломатичний супровід зовнішнього державного боргу України

The purpose of the article is to substantiate the measures regarding diplomatic support of the Ukraine's foreign public debt in the conditions of a critical budget deficit. The analytical basis of the proposals are the results of the assessment of trends in the development of international flows of debt capital and the world experience of diplomatic assistance to countries in the process of overcoming their debt crisis. It has been established that the process of international movement of loan capital, in which countries are active participants regardless of the economic development level, is characterized by dynamic trends of value growth. A critical factor in the growth of public debt in Ukraine is the decrease in the value of GDP and the inability to cover the budget deficit as a result of high military and social costs. It has been proved that the minimization of risks associated with the State's dependence on international borrowing is possible under the condition of effective diplomatic support of the external debt at all stages of its formation and maintenance. Ukraine has positive results of diplomatic debt support (favorable conditions for obtaining new loans, partial restructuring of existing debt). However, in the future, under conditions of preservation of current trends, the growth of foreign debt will pose a threat to the economic security of the State. Based on the analysis of alternative options for overcoming the debt crisis, the authors substantiate the expediency of Ukraine's diplomatic request to international creditors for preferential debt restructuring; active cooperation with foreign countries regarding mediation in interaction with international financial organizations in the direction of initiating special programs of financial support for Ukraine. Diplomatic support of foreign public debt should occur simultaneously with the further integration of Ukraine into the European Union, measures to stimulate economic growth in the country, which will contribute to increasing the international investment attractiveness and credit ratings of the national economy.

On Capital Flight from the ASEAN-8 Countries: A Panel Data Estimation

This paper examines how macroeconomic variables, such as interest rate differences, inflation, exchange rates, economic growth and external debt growth, affect capital flight in the ASEAN-8 countries. We apply a panel data model with fixed effect estimation for the data for eight countries from the period 1994 to 2018. We use the residual approach used by the World Bank to measure the value of capital flight. The results show that the interest rate differences, exchange rates, economic growth and foreign debt growth had a positive and significant effect on outward capital flight. A further implication of this finding is that the interest rate differences, exchange rate, economic growth and foreign debt growth are factors that trigger an increase in capital outflow in the ASEAN-8 countries. Nonetheless, inflation rate is not considered to be the main factor influencing capital flight, as average inflation in the ASEAN-8 countries remains relatively stable. This paper will be beneficial for policymakers in the ASEAN-8 countries and encourage them to constantly pay attention to these four variables, as they significantly influence capital flight, whereas they can disregard the impact of the inflation variable that is not significant in influencing capital flight.

Does Debt Really Crack the Whip? Evidence from a Panel of Selected OECD Countries

Abstract External debt and GDP relationship has long been a focus of interest. The outcome of time series analyses and a few panel data outcome of previous studies are contradicting. In an attempt of unifying we have tried a panel data model of 17 selected OECD countries. We have estimated pooled regression, fixed effects and random effects models. The result in this first round of estimation was in favor of fixed and ultimately random effects model. However, error terms of all these models turned out to be serially correlated. To overcome this problem several alternative dynamic models have been experimented. Overall result of study shows that for the OECD countries the foreign debt growth relationships is a positive one. Although there are some countries in the world that have a negative relationship, for the case of OECD at least, positive relationships are indicative of good policy administration.

Экономическая модернизация Турции: общее и особенное

The article examines the path of Turkey’s economic development since the Ottoman period up to the present day. The author offers not to follow the common approach to the periodization of the process of economic modernization in Turkey based on the changing importance of state enterprise (public sector). The matter is that such an approach fails to explain enough convincingly the fact of persistent Turkey’s economic lag from South Korea. The latter has started the catch-up development much later but today stays higher in all international economic ratings than Turkey. As an alternative the author identifies main periods in Turkey’s history in accordance with specific features of their fiscal and monetary policies. Within this approach, the breaking point in the process of Turkish economic modernization is seen in the middle of XX century. After 1950, the country entered a period of chronic budget deficits. Due to subordinate status of the Central Bank the money supply and inflation was considerably increased. The main reason for the turnabout in the financial policy was the change in the country’s political system, i.e. Turkey’s transition to the regime of multi-party democracy, tough inter-party competition and, as a result, commitment of the authorities to populist policies. Excessive budget expenditures were used by different governments for their own specific aims. However, a high level of domestic consumption became a general feature of the budgetary policy of Turkey. It was closely related to the rather high capacity of the domestic market and the growth of foreign debt. The overheated domestic market caused a certain inconsistency in the implementation of the export-oriented model and delayed exports’ diversification. This model did not change critically in the 2000s. Even though the country showed progress in terms of financial stabilization, serious problems still persist. While budgetary deficit has been basically solved Turkey still faces growing current account deficit and indebtedness of the private sector, the decline in savings’ rate and the burst of consumer credits. The country’s inability to develop on its own financial basis proves to be its most fundamental weakness. This openly showed up in 2013 because of the reorientation of international financial flows from emerging markets to developed countries.