External debt and economic growth in selected Asian countries/ Nur Nabilah Hani Tugiran

The purpose of this study is to investigate the impacts of external debt on economic growth in selected Asian countries, namely Malaysia, Pakistan, Indonesia, India and Bangladesh from 1981 to 2013 using Ordinary Least Square (OLS). The findings suggest that there exist positive relationship between debt services and economic growth, while external debt is negatively related with economic growth. Furthermore, capital formation has a positive impacts on the growth meanwhile the population and trade openness are negatively related with the economic growth. In addition, this study made use of several diagnostic tests, such as normality of errors, heteroskedasticity, multicollinearity, autocorrelation and specification biased. The study recommends that the policies of debt management should be improve. The government should pay attention on the debt management profile particularly on the expenditure item and diversify the economy to generate more revenue and avoid external borrowing to the extent possible.