EXTERNAL DEBT AND ECONOMIC PERFORMANCE OF SMALL COUNTRIES

Abstract

This paper examines the effects of foreign debts on the economic performance of small countries. Forty‐eight small countries, each with a population of approximately five million, have been desegregated according to their per capita income and geographical location. The groups in question include Africa, the Caribbean region, Latin America, the Middle East, and Europe. Using correlation analysis, analysis of variance, and multiple comparison procedure, the collected data on fourteen economic indicators for each group of countries were analyzed. It was found that the economic effects of external debt varied among countries not only on the basis of their income level, but also on the basis of their geographical locations. Middle Eastern and European countries, being more prosperous, were able to maintain a relatively lower external debt to export ratio and thus were able to attain better economic accomplishments as compared to the poorer nations such as those in Africa, Latin America, and the Caribbean region. Within this latter group, those countries which were able to borrow more in relation to their GDP were able to perform better as far as their export, import, and government expenditures are concerned.

Citation

Niroomand, F. and Hamvi, I.S. (1995), "EXTERNAL DEBT AND ECONOMIC PERFORMANCE OF SMALL COUNTRIES", International Journal of Commerce and Management, Vol. 5 No. 4, pp. 38-48. https://doi.org/10.1108/eb047321