The Interplay of Debt Service, FDI, and GDP Growth on Economic Resilience Across Developing Regions
This study examines the relationship between economic resilience and three critical factors-debt service, foreign direct investment (FDI), and GDP growth-across four developing regions: Latin America and the Caribbean, Western and Central Africa, Eastern and Southern Africa, and Sub-Saharan Africa....
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| Format: | Online |
| Language: | English Spanish |
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Universidad Francisco de Paula Santander
2025
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| Online Access: | https://revistas.ufps.edu.co/index.php/profundidad/article/view/5133 |
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| Summary: | This study examines the relationship between economic resilience and three critical factors-debt service, foreign direct investment (FDI), and GDP growth-across four developing regions: Latin America and the Caribbean, Western and Central Africa, Eastern and Southern Africa, and Sub-Saharan Africa. By constructing a resilience index based on the stability of GDP growth, debt service as a percentage of GNI, and FDI inflows, the study uncovers significant regional disparities in economic performance. The results show a strong negative correlation between high debt burdens and resilience, suggesting that excessive debt service undermines economic stability. In contrast, FDI inflows contribute positively to resilience, although they are associated with higher GDP growth volatility. While GDP growth is positively correlated with resilience, it does not significantly affect the resilience index in the regression model, underscoring the greater importance of structural factors such as debt management and FDI in driving resilience. The study highlights the need for region-specific policy interventions to address these challenges. For Latin America and the Caribbean, recommendations include debt restructuring and strengthening fiscal discipline to alleviate high debt burdens. In Sub-Saharan Africa, policies should focus on improving infrastructure and attracting higher FDI inflows to build resilience. Eastern and Southern Africa would benefit from economic diversification to reduce reliance on volatile sectors, while Western and Central Africa should prioritize sustaining robust GDP growth through investment in infrastructure and human capital. These tailored strategies are essential for enhancing long-term economic stability and resilience in developing countries and provide a roadmap for policymakers to address region-specific challenges and opportunities. |
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