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Journal of Economic Integration 2018 March;33(1) :1141-1157.
External Debt and Economic Growth
: The Case of Emerging Economy

Sami Al Kharusi Mbah Stella Ada 

Sultan Qaboos University, Muscat, Oman
Federal University Oye-Ekiti, Ekiti State, Nigeria
Corresponding Author: Sami Al Kharusi ,Email:
Copyright ©2018 Journal of Economic Integration
This study investigated the relationship between government external borrowing and economic growth, prompted by continuous increases in Oman’s external debt to finance its annual budget. Time series data for the period 1990~2015 were collected from the World Bank and the Central Bank of Oman. The study employed the Autoregressive Distributed Lag cointegration approach explain the error correction mechanism to ascertain the short-run dynamic nature of external debt and economic growth. Consistent with some existing empirical evidence, the study reveals a negative and significant influence of external debt on economic growth in Oman. Further, gross fixed capital was found to be positively significant in determining growth performance in Oman. The study, therefore, recommends a more productive use of the external debt fund in order to affect positive growth.

JEL Classification
F43: Economic Growth of Open Economies
E51: Money Supply; Credit; Money Multipliers
C32: Time Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models
Keywords: Economic Growth | External Debt | Government Investment | Oman | Public Investment
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