External Debt Accumulation and Institutional Quality in Selected ECOWAS and SADC Countries: Implications for Efficiency in Governance
DOI:
https://doi.org/10.22452/IJIE.vol18no4.8Keywords:
External Debt Accumulation, Institutional Quality, ECOWAS, SADC, Panel dataAbstract
The paper examined the impact of external debt accumulation on institutional
quality in selected ECOWAS and SADC countries from 1990 to 2023. The study
analysed a group panel data set using the dynamic ordinary least squares (DOLS) and
the fully modified ordinary least squares (FMOLS) estimation techniques. The study
also analysed sub-group panel data sets on ECOWAS and SADC using the pooled mean
group (PMG) estimation technique. The findings from the group analysis revealed that
external debt accumulation had a negative and significant impact on institutional quality
in the selected countries at the 1% level during the study period. Also, the panel subgroup
analyses revealed that external debt accumulation had a negative and significant
impact on institutional quality in ECOWAS and SADC countries, respectively. The
implication of the finding is that high external debt accumulation lessens the efficiency
of government institutions. The paper recommended that the selected ECOWAS and
SADC countries should make effective external debt management policies with the view
of reducing external debt accumulation, employing external debt in viable productive
expenditures and avoiding spending that can trigger external debt accumulation.
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