PUBLIC DEBT AND ITS IMPACT ON ECONOMIC GROWTH IN EMERGING ECONOMIES
Keywords:
public debt, economic growth, emerging economies, debt sustainability, fiscal policy, government borrowing, fiscal space.Abstract
Public debt has become an important instrument of fiscal policy in
emerging economies, where governments frequently rely on borrowing to finance
infrastructure, social programs, and economic development. This article examines the
impact of public debt on economic growth in emerging economies, with particular
attention to the conditions under which government borrowing can promote or
constrain long-term economic development. The analysis indicates that the
relationship between public debt and economic growth is complex and often nonlinear.
Moderate and efficiently managed public debt can stimulate economic activity by
financing productive investment and supporting aggregate demand. However,
excessive debt accumulation may negatively affect economic growth through higher
debt-servicing costs, reduced fiscal space, crowding-out of private investment, and
increased macroeconomic vulnerability. Empirical research also suggests that
emerging economies may be more sensitive to high debt levels because of relatively
limited fiscal capacity, external financing risks, and institutional constraints. The
article concludes that the growth effects of public debt depend not only on its size but
also on its structure, sustainability, institutional quality, and the efficiency with which
borrowed resources are allocated.
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