External Debt and Economic Growth in West Africa
Evidence from a Panel ARDL Analysis
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Abstract
The study investigated the relationship between external debt and economic growth in West Africa for the period 1990 to 2024. Real gross domestic product served as the dependent variable, while external debt burden, external debt crowding-out effect, external debt servicing, and external debt-to-reserve ratio represented the key explanatory variables. Control variables, including gross fixed capital formation, trade openness, inflation rate, human capital, and institutional quality, were selected based on standard macroeconomic growth literature and theoretical relevance. The study adopted a quantitative longitudinal panel research design. Data analysis employed the panel Autoregressive Distributed Lag (ARDL) model estimated using the Pooled Mean Group (PMG) technique to examine both short-run adjustments and long-run equilibrium relationships. Unit root and cointegration tests were also conducted to establish the validity and robustness of the model. The findings revealed that external debt burden (EDB) exerted a negative and statistically significant effect on economic growth at the 5% level. External debt crowding-out effect (COE) had a positive but statistically insignificant effect on economic growth. In contrast, external debt servicing (EDS) exerted a positive and statistically significant effect on economic growth at the 1% level. External debt-to-reserve ratio (DRR) showed a negative but statistically insignificant effect on economic growth in the long run. The study recommends strengthening debt sustainability frameworks, linking external borrowing to productive investments, and building adequate foreign exchange reserves to reduce external vulnerability and promote sustainable economic growth in West Africa.
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Copyright (c) 2026 Awolumate, Tabitha Osigotu, Ughulu, Stephen Ebhodaghe (Author)
This work is licensed under a Creative Commons Attribution 4.0 International License.
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