The Impact of External Debt to Growth in Kenya: 1980--2000

Abstract

This research paper assess the linear impact of external debt on growth in Kenya using a dataset that spans the period 1980-2000. The results are generally robust in econometric regressions using simple OLS methodology across the two different debt indicators employed. The paper finds that the impact of external debt on Kenya's economic growth is negative and significant. The paper's findings also suggest that the average impact of debt on growth becomes negative at about 251.4-310.4 per cent of exports and 71.2-87.3 per cent of GDP. The paper finds it difficult to fit an inverted Ushaped non-linear specification for the panel data used.