关于外债对经济增长的影响的assignment范文

外债或外国援助被认为是发展中国家收入的重要来源。巴基斯坦已经非常依赖外债来融资和投资目的。在20世纪70年代对外部资源的依赖成为不可控制的，本文的主要目的是探讨巴基斯坦的外部债务与经济增长之间的关系。从1947到目前为止，，我看了巴基斯坦的外债和经济效益。本文表明，外债与巴基斯坦的经济增长呈负相关。有证据显示，外国援助的增加将导致经济增长下降。债务还本付息对经济增长率也有显著影响。随着债务还本付息的趋势越来越高，经济增长的机会将越来越少。

关键词：经济增长，外债，债务还本付息

债务存量积累一直是发展中国家和发达国家面临的首要问题。发展中国家面临这个问题，更多的是因为他们需要借钱来促进他们的发展过程，并加快增长速度。然而，所需的借来的资金被正确地分配给生产性支出，并根据他们的还款能力。虽然债务对经济的增长是有用的但是对债务的依赖必须密切监视并且应该采取适当的策略以提高国家的偿还能力。此外，由于还款的税收融资和更高的资金较少的可用性，阻碍增长，导致债务偿还能力下降。它也导致挤出效应，以及对外国的负面影响，以及对国内投资和发展计划的政府。

External debt or Foreign Aid is thought an important source of income for developing countries. Pakistan has relied much on external debt to finance and for investment purposes. The dependence on external resources became uncontrollable in the 1970s. The prime objective of the paper is to explore the relationship between external debt and economic growth in Pakistan. I took a glance of external debt and economic performance of Pakistan from 1947 to till now. This paper shows that External Debt is negatively related to the economic growth of Pakistan. The evidence highlights that an increase in Foreign aid will lead to decline in economic growth. Debt servicing has also significant impact on growth rate. As the debt servicing tends to higher, there will be fewer chances of economic growth.

Keywords: Economic Growth, External Debt, Debt Servicing

Introduction 简介
Accumulation in debt stock has been the prime problem faced by both developing and developed countries. Developing countries face this problem more often as they need to borrow to facilitate their development process and accelerate the growth pace. However, the borrowed funds required to be allocated properly for the productive expenditures and in accordance to their repayment ability. Though debt is useful for the growth of the economy however dependence on debt must be closely monitored and proper strategy should be adopted for enhancing the repayment capability of the country. Besides, due to the less availability of funds for financing and higher in taxes for repayment, hampers growth that results in shrinking of the repayment capacity of debt. It also leads towards crowding out effect as well as has negative impact on the foreign as well as on domestic investment and developmental plans of the government.

The external debt exerts significantly negative impact on growth of country economy. This assured the existence of debt overhanging in Pakistan in both long and short run. Labour force affect GNP negatively in long run and short run as well, but in short run impact is insignificant. Pakistan faces serious debt problem, which threaten the future of the country economy. Burden of external debt and debt servicing have continued to grow over time.

Economic reforms process is a clear progression towards the deregulation for the growth economy. Petroleum products, gas, energy, agricultural commodities and other key inputs prices are mostly determined by markets. More importantly, taxation reforms have been prominently on the government's agenda, with no real reforms undertaken. 

There are three main indicators of debt burden as;

Export Receipts: It measures the ability of debt repayment and creditworthiness of a country. According to the World Bank Report, when debt of a country go beyond 20% of its export earnings then its debt becomes uncontrollable.

Foreign Exchange Earnings (FEE): This is another important indicator of indebtness of a country.

Growth Domestic Product (GDP): This determines the burden of debt burden on the country's income. As Debt service to GDP ratio goes up, increase in the burden. As a research by Nagassam C.A, (2005) employed a model and highlighted that higher the debt service ratio will be, the lower the GDP will be and it will create constraint for external debt capacity of nations.

Fiscal as well as real sectors of the economy are strongly linked to public and foreign aid through economic variables. But, it appears that it turns out that the deficiency in savings and its effects on the BOPs is the basis of foreign aid. While, on the other hand, the budget deficit is the major cause of public debt. The rationale behind this is that level of debt, and the rate of growth of public debt should not unduly limit the flexibility of country's monetary, fiscal and exchange rate.

Pakistan's aid dynamics has undergone substantial changes since FY2007. Due to non availability of sufficient funds from the external sources, the financing focus shifted towards domestic sources that led to shortening of maturity profile of public debt. A confluence of unfavourable factors including lower GDP growth, devastating floods, severe energy shortages, haemorrhaging PSEs (public sector enterprises), high inflation, weak security situation and global economic recession resulted in higher fiscal deficits in the recent past.

Debt level depends on the debt paying capacity of the economy i.e. average income, export earnings, remittances and revenue generation capacity.

Debt burden can be measured in terms of stock ratio i.e. Debt to GDP and flow ratios i.e. Debt to revenue, external Debt to Foreign exchange Earnings. It is common practice to measure external debt burden as a percentage of GDP. However, it makes more sense to measure debt burden in terms Debt to revenue, external Debt to Foreign exchange Earnings of because they reflects more accurately on repayment capacity as GDP changes do not fully translate in to revenues particularly in case of Pakistan where taxation machinery is weak and taxation systems are also inelastic.

The total debt was Rs.10, 709 B as at June 30, 2012, and an increment of Rs.1, 788 B or 20% higher than the debt stock at the end of 2011. Government have taken Rs.1, 086 billion from Public debt and Rs.62 billion from foreign aid to finance operations. Approximately, US$ 3.3 billion were accumulated to the external debt stock owing to depreciation of US Dollar against other major international currencies and around Rs.27 billion was accumulated by depreciation of Pakistani Rupee against the United States Dollar. US dollar Depreciation against other major currencies caused public debt to increase by approximately US $3,300 million in the foreign currency component.

On the other hand, Increase in demands of the government budget during 2010-11 due to security meant decrease in the fiscal deficit. Secondly, lower GDP growth, energy shortages, lead towards a revenue shortfall; situation was complicated by the severe floods by putting additional burden on operations. But on the other hand, higher international prices for textile products had a positive impact on PTB (Pakistan Trade Balance).

Relationship of External Debt with GDP 外债与GDP的关系
Malik, Hayat, and Hayat (2010) analyze the relationship between foreign aid and economic development for the period 1972 - 2009 of Pakistan. The result shows that external debt is negatively relates to the economic growth. There results shows that increase in foreign aid will lead to decline in economic growth.

Hameed et al. (2009) on Pakistan explain the short run and the long run relationship between foreign aid and economic development. Annual time series data from 1970 to 2008 was taken to analyze the effect of GDP, debt repayment, revenue on her economic development. The study results show that debt burden is negatively related to the productivity of labour and capital, thereby affecting economic development.

Chaudhary and Ali (2009) analyzed external debt up to the year 2009-10 and presented an measure to reduce debt burden. They proposed to increase savings as measures to overcome the problem. According to them, Pakistan will be able to increase its savings by 3 % and it can significantly reduce dependence on foreign resources. They focused on projection of Pakistani foreign debt. They projected the foreign debt for the period of 2009-10 to 2014-15. The empirical findings of the study are consistent with economic theory. Pakistan's foreign dependence will be doubled by the year 2015 in comparison to previous researches. Similarly, its debt servicing as a % of Growth national product will be more than square by the year 2015. They gave trade policy as an alternative strategy to debt and suggest that if Pakistan can reduce imports by 2 % and increase exports by 2 %; borrowing can then be decrease by a considerable amount.

Patillo et al. (2002, 2008) examined relationship of the total external debt and the GDP rate for 61 countries, for the period 1978-2008. They analyze out a backward bending curve for growth with a debt to growth strait line relationship at certain lower levels of national debt and adverse relationshipat other higher levels. This resulted that only after a certain threshold has been reached, effects of over debt are likely to occur.

Effectiveness of External debt 外债有效性
Rahim khan (1998) examined the yearly basis changes in two indicators of economic development; first is the domestic savings in then the net economic receipts on economic development of Pakistan. The result suggests that regression of Ordinary Least Square using the years 1970 to 1990 as sample years. Regression equations for savings provided negative coefficients of correlation for mobilization of resources between foreign aid and domestic efforts. Aids in grant also have a positive impact on economic development after a year of actual disbursement, but its estimated coefficient is then not significant.

Afxentiou and Serletis (2006) said that to protect future credit-worthiness, Pakistan has initiated certain restraining measures to minimise inflationary pressures and to protect its exports like many other countries of the world. Since there is a, however, substantial time-lag for these measures to work through the economy their way, its development is adversely effected from delays in their effectiveness.

Helene Poirson, and Catherine Pattillo (January 2006) analysed that Channels through which foreign debts impacts growth, over the period 1970-08. In the late 1990s, policymakers around the world have been curiously concerned that high external indebtedness in many countries is limiting development. In Pattillo and Ricci (2006) (known as PPR), they found that empirical evidence for a nonlinear impact of debt on growth: at lower levels, debt has positive impact on development; but certain thresholds or turning points, additional debt begins to have a adverse impact on development.

Ministry of Finance Report 2011 财政部2011年报告
The theory for public debt sustainability says that that the basic relationship between economic growth and debt stability in a country. Result in some negative tendencies and changes in main macroeconomic indicators, like crowding out of investment, financial system instability, inflationary pressures, exchange rate fluctuations etc is due to the mismanagement of debt and an unlimited development of debt to GDP ratio. There are also political and social implications of unsustainable debt. Persistent public debt calls for a higher budgetary resources for debt. Moreover, the conventional wisdom focuses on the debt management, rather debt itself.

Yet the management of debt is important as debt is not a stigma in itself,. Debt is only a measure of bridging the financing gaps. Proper utilization of debt leads government to accomplish its social and developmental goals and higher economic growth.

As long as the real growth of revenue is higher, then as s a rule of thumb the real growth of debt, the Debt to Revenue ratio will not increase.

Investigation of Debt vs. GPD 债务与GPD调查
Schclareak (2005) investigated Gross Debt and per capita Gross Domestic Product growth in different countries. The analysis of the paper shows that no strong evidence exists between gross government debt and per capita GDP growth for a sample of 30 developed countries with data from 1980 to 2008.

Sheikh et al. (2010) investigate the effects of internal debt on economic development in by applying the Ordinary Least Square technique for the period of 1974 to 2010. The study indicates that the stock of internal debt have impact on the economic development positively. They also concluded that the resources through internal borrowing are partially linked to finance those expenditures which contribute the economic development. Furthermore, they analyzed that there is an adverse relationship between internal debt and growth. They found that this result is due to the large burden of non-developmental expenses that harms the economic progress. The results of study also reveal that the adverse impact of domestic debt on economic development is higher than positive impact of internal debt.

Quantitative Estimates 定量估测
(Siddiqui and Malik, 2001; Chaudhary and Anwar, 2001; Burney, 1996) analyze the impact of debt on economic progress of Pakistan. The quantitative estimates are based on cross-sectional analyses of the study. They have used cross-sectional data for analysing; they have not been able to the extent take into account the non-stationary properties of the macroeconomic time series. Validity of their results is doubtful because they suffer from spurious regression problems. The present study has analyzed the effect of foreign debt on economic growth with a method that has modelled the no stationary behaviour of the included variables for Pakistan. More specifically, Cunningham (1999), this study has employed a vector error correction framework (VECM) for studying the short-run and long-run impacts of external debt service on GDP taken as an indicator of economic growth.

An impressive analysis is made by Reinhart and Rogoff (2010) who selected 44 countries over around 200 years, collecting about 3,700 yearly observations. They found out that government debt and GDP growth rate is weak for debt to GDP ratios below a certain threshold of 92% of GDP, while, above 92%, median growth rates fell down by 1.5%, and average growth falls, however more considerably. The emerging markets are lower thresholds for foreign debt: when external debt reaches to 60% of GDP then annual growth rate decreases by about 2% and at higher levels the growth rates are roughly cut in half.

Theoretical Framework 理论框架
The analysis of debt and economic growth is based on theoretical framework design of Cunningham (1996) studies who argues that the impact of debt burden affects the productivity of labour and capital that is same as exports on the productivity of non-export sector in the Feder's (1988) model. The neo-classical production function model relates the economic development to debt, labour and capital. A nation has significant debt burden as much as, the need to service its debt will impact how labour and capital will be employed in the production function. Specifically speaking, if the income of the productivity increase is transferred to foreign loaners and not to domestic agents then the little incentive will be left to increase the productivity of capital. In turn, this means that increase in debt burden will decline the economic growth of a country. It is pointed out further that when a nation is suffering from heavy debt servicing, then there is a need to service that debt evaluates the manner in which capital are exploited in the production process. Moreover, if the foreign creditors benefit more from the rise in productivity than domestic agents, then the domestic agents are discouraged from increasing the application of capital or labour in the economy.

This neo-classical production function of Cunningham in 1996 suggests that existence of a long-run relation of economic growth and three inputs debt burden, labour and capital. The long-run relationship possibility is tested by using simply a co integration technique. For that purpose it is said that external debt has an adverse effect on economic growth.

Conclusion 结论 
The purpose of study is to know the impact of rapidly rising debt on economic growth of Pakistan. The dependency of Pakistan on foreign aid is clearly evident from the magnitude of the debt burden now days on Pakistan economy and on debt-servicing. Pakistan's debt position, as given by various sustainability ratios, as soundness remains higher than the internationally accepted thresholds. The Debt servicing below 30 percent of government revenue and Total Public debt levels around 3.5 times are generally believed to be sustainable. The debt serving to revenue has declined to 37.7 percent in 2010-11 from 40.4 percent in 2009-10 whereas; Total public debt in terms of revenues has increased to 4.7 times during 2010-11, as opposed to 4.3 times in the previous fiscal year. However, to reduce the debt burden and improve the debt carrying capacity of the country to finance the growth and development needs the widening gap between the real growth of revenues and real growth of Total Public Debt needs to be addressed.

Debt-GDP ratio decreases by 0.8% point to stand at 59.3% during FY2011 that is below of 60% in the FRDL Act 2005 stated level. Limit on borrowing from State Bank of Pakistan and fiscal control facilitated this reduction. But debt-GDP may be understated as we also know that this ratio does not include any estimates of contingent liabilities because this materializes in future. Government has, unfortunately, not installed any system to manage the fiscal impact of these contingencies. Pakistan's Foreign debt and debt repayment in terms of FER stood at 1.3 times and 11.4 % during 2011-12 in comparisons to 1.5 times and 16.5% respectively in 20010-11, within the stated level of threshold of 2 times and debt that is than below 20%of FEEs. However, repayment of International Monetary Fund debt starting from 2nd Half of FY2013 will also put pressure on Foreign aid in coming years; therefore the government to should take necessary measures for attracting debt and non-debt currency flows. Current global economic scenario will be uphill task for the government to manage external account solvency.

Excessive debt has strong impact on country's economic growth in many ways. First of all, the large debt repayment service requires dry foreign exchange, because they are transferred to borrowers to payback principal and interest. A country benefits only when an increase in output because a growing fraction of the increase gets the accrued debt. And secondly, when the debtor are not able to fulfil their debt obligations then the debtor countries are high risk countries and they find it difficult to borrow. So as a result the debtor countries have to pay high interest rates to obtain their new credit. Furthermore thirdly, the accumulation of debt leads towards a reduction in an economy progress, since it is difficult to adjust some shocks and international financial fluctuations.

Finally, to save more foreign exchange so as to meet debt obligations many debtor countries restrict trade and also cut down on an import which leads to poor performance.

However overall describing, the results suggests that debt overhang is an important factor in overall debt scenario of Pakistan Economy. High debt burden has risen from macroeconomic imbalances mismanagement of resources and loss of competitiveness in the market internationally. The evidence of negative relationship between GDP and debt indicate that borrowed resources were most of the time usually misallocated on consumption. The continued longer term negative impact of debt on will minimise the country's ability to service its debt in future. Though, a broad expansion in internal debt poses negative connotations for internal investments, fiscal sustainability and also for ultimately economic progress and reduction in poverty in case of financial markets and debt mismanagement.

Recommendations 建议
Fluctuating tendencies' between growth in foreign exchange earnings (FEEs) and government revenues, and foreign exchange payments and expenditure on the other hand, point outs towards underlying structural issues which need to be addressed in a proper way. Export and other foreign currency non-debt creating flows should increase above and beyond the growth of foreign exchange payments and growth of foreign aid. The government by doing so will be also able to restrict the non-interest current account deficit (CAD), and ensure to sustain the levels of foreign debt. Lead to a balance of payment crisis and explosive debt path will severely hamper the government's room to manoeuvre in case of future external shocks and may possibly failure to arrest the gap of foreign exchange inflows and outflows. Moreover, access to cheap external finance that can be in the form of concessionary grants from international financial institutions like IMF and World Bank and multilateral institutions, governments can now then avoid expensive internal borrowing. To avoid future debt traps and limit the growth of public debt burden it is essential that significant growth in revenues is achieved while at the same time undertaking a rationalization of expenditure.

From given theoretical and also econometric results, this study strongly suggests the following few remedies:

1) First of all minimise the expenditures on debt servicing. It can be achieved by better professional and skilled discussion with the donor countries and institutions.

2) To efficiently allocate and to develop constraints to utilize the amount of external debt on more productive and development expenditures. So that it might be a source of increase in net investment in the country and to increase the exports of the economy. Further, to reduce the trade deficit and overall government deficit.

3) To reduce the population growth rate, since it has been found to have significant positive correlation with unemployment rate in the economy. This reduction in growth rate of population will not only cause to improve per capita income of Pakistan, but also be helpful to improve the living standard of the people.

4) To control the hyper inflation, and to make price stability sustainable with GDP growth rate of the economy.

5) The external debt must be allocated to increase the technical skill and professional capabilities of the people. So that they might be able to increase the manufacturing sector growth rate of the economy.