External Debt and Economic Growth: Case of Jordan (1990-2011)

Abstract

External debt is considered a significant source of income for less developed countries. Jordan, as one of these countries, relied much on external debt to finance its saving investment gap and balance of payment deficit. The main objective of this paper is to explore the relationship between external debt and economic growth in Jordan during the period of 1990-2011, using time series econometric techniques. This paper shows that there is a positive and significant relationship between external debt and economic growth. Debt servicing has a negative and significant relationship with economic growth.

Keywords: Economic Growth, External Debt, Ordinary Least Squares, Fully Modified Least Squares.