Revisiting the Dynamics of Public Debt and Economic Growth in Developing Nations

Suraj Badaik, Tapas Payra, Deepak Toppo

Abstract: This paper investigates the impact of external debt on economic growth of sixty-three less-developed countries over a period of 1981 to 2023. Fixed effect model has been used for regression analysis. The study finds a negative correlation between external debt and the economic growth rate of less-developed countries. In contrast, control variables such as Gross Capital Formation (GCF) and Trade Openness (TO) exhibit a positive and strong relationship with GDP growth. Meanwhile, Foreign Direct Investment (FDI), due to its relatively low share as a percentage of GDP, shows an insignificant impact on economic growth.

Keywords: Economic Growth, Public Debt, Less-developed Countries, Fixed Effect

How to Cite?: Suraj Badaik, Tapas Payra, Deepak Toppo, "Revisiting the Dynamics of Public Debt and Economic Growth in Developing Nations", Volume 14 Issue 7, July 2025, International Journal of Science and Research (IJSR), Pages: 1780-1785, https://www.ijsr.net/getabstract.php?paperid=SR25731165237, DOI: https://dx.doi.org/10.21275/SR25731165237