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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Universidad Francisco de Paula Santander
2025
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| author | Yangailo, Tryson |
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| description | 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. |
| first_indexed | 2026-06-19T15:28:45Z |
| format | Online |
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| language | eng spa |
| last_indexed | 2026-06-19T15:28:45Z |
| publishDate | 2025 |
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| publishDateSort | 2025 |
| publisher | Universidad Francisco de Paula Santander |
| publisherStr | Universidad Francisco de Paula Santander |
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| spelling | oai:revistas.ufps.edu.co:article-51332025-09-10T15:25:37Z The Interplay of Debt Service, FDI, and GDP Growth on Economic Resilience Across Developing Regions La interacción entre el servicio de la deuda, la inversión extranjera directa y el crecimiento del PIB en la resiliencia económica de las regiones en desarrollo Yangailo, Tryson Resiliencia económica Inversión extranjera directa Servicio de la deuda Estabilidad del crecimiento del PIB Países en desarrollo Economic Resilience Foreign Direct Investmen Debt Service GDP Growth Stability Developing Countries 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. Este estudio examina la relación entre la resiliencia económica y tres factores críticos —el servicio de la deuda, la inversión extranjera directa (IED) y el crecimiento del PIB— en cuatro regiones en desarrollo: América Latina y el Caribe, África Occidental y Central, África Oriental y Meridional, y África Subsahariana. Mediante la elaboración de un índice de resiliencia basado en la estabilidad del crecimiento del PIB, el servicio de la deuda como porcentaje del INB y las entradas de IED, el estudio revela importantes disparidades regionales en el rendimiento económico. Los resultados muestran una fuerte correlación negativa entre las elevadas cargas de la deuda y la resiliencia, lo que sugiere que un servicio de la deuda excesivo socava la estabilidad económica. Por el contrario, las entradas de IED contribuyen positivamente a la resiliencia, aunque se asocian con una mayor volatilidad del crecimiento del PIB. Si bien el crecimiento del PIB está correlacionado positivamente con la resiliencia, no afecta significativamente al índice de resiliencia en el modelo de regresión, lo que subraya la mayor importancia de factores estructurales como la gestión de la deuda y la IED para impulsar la resiliencia. El estudio destaca la necesidad de intervenciones políticas específicas para cada región a fin de abordar estos retos. Para América Latina y el Caribe, las recomendaciones incluyen la reestructuración de la deuda y el fortalecimiento de la disciplina fiscal para aliviar las elevadas cargas de la deuda. En el África subsahariana, las políticas deberían centrarse en mejorar las infraestructuras y atraer mayores entradas de IED para fomentar la resiliencia. El África oriental y meridional se beneficiaría de la diversificación económica para reducir la dependencia de sectores volátiles, mientras que el África occidental y central debería dar prioridad al mantenimiento de un crecimiento robusto del PIB mediante la inversión en infraestructuras y capital humano. Estas estrategias adaptadas son esenciales para mejorar la estabilidad económica y la resiliencia a largo plazo en los países en desarrollo y proporcionan una hoja de ruta para que los responsables políticos aborden los retos y oportunidades específicos de cada región. Universidad Francisco de Paula Santander 2025-07-01 info:eu-repo/semantics/article info:eu-repo/semantics/publishedVersion application/pdf text/html text/xml https://revistas.ufps.edu.co/index.php/profundidad/article/view/5133 10.22463/24221783.5133 Revista Científica Profundidad Construyendo Futuro; Vol. 23 No. 23 (2025): Julio-Diciembre; 44-64 Revista Científica Profundidad Construyendo Futuro; Vol. 23 Núm. 23 (2025): Julio-Diciembre; 44-64 2422-2518 eng spa https://revistas.ufps.edu.co/index.php/profundidad/article/view/5133/6232 https://revistas.ufps.edu.co/index.php/profundidad/article/view/5133/6233 https://revistas.ufps.edu.co/index.php/profundidad/article/view/5133/6386 /*ref*/Antoniades, A. (2017). The new resilience of emerging and developing countries: Systemic interlocking, currency swaps and geoeconomics. Global Policy, 8(2), 170-180. https://doi.org/10.1111/1758-5899.12399 /*ref*/Armah, B. (2022). Rethinking Fiscal Space and Debt Sustainability. In Sustainable Development in Post-Pandemic Africa (pp. 121-137). Routledge. /*ref*/Briguglio, L. P. (2016). Exposure to external shocks and economic resilience of countries: evidence from global indicators. Journal of Economic Studies, 43(6), 1057-1078. https://doi.org/10.1108/JES-12-2014-0203 /*ref*/Briguglio, L., & Piccinino, S. (2012). Growth with resilience in East Asia and the 2008–2009 global recession. Asian Development Review, 29(02), 183-206. https://doi.org/10.1142/S0116110512500175 /*ref*/Dahmani, L., & Makram, H. (2024). Fostering Economic Growth Through Financial Stability in Sub-Saharan Africa. Journal of Business and Economic Options, 7(4), 13-22. /*ref*/Diop, S., Asongu, S. A., & Nnanna, J. (2021). COVID‐19 economic vulnerability and resilience indexes: Global evidence. International Social Science Journal, 71(S1), 37-50. https://doi.org/10.1111/issj.12276 /*ref*/Gnangnon, S. K. (2022). Effect of Productive Capacities on Economic Resilience in Developing Countries. Asian Development Perspectives, 13(1). /*ref*/Henri, A. O. (2019). Heavily indebted poor countries initiative (HIPC), debt relief, economic stability and economic growth in Africa. Economic Change and Restructuring, 52, 89-121. /*ref*/Hossaini, S., Ghaderi, S., Mozaffari, Z., & Amani, R. (2024). Economic Vulnerability and Resilience of the World in the Face of the COVID-19 Pandemic. International Journal of New Political Economy, 5(1), 323-358. /*ref*/Husain, B. (2024). Impact of Foreign Direct Investment (FDI) on Economic Growth in Congo. Journal of Developing Economies, 6(1), 25-35. /*ref*/Lian, T., & Li, C. (2024). Linking Environmental Sustainability and Financial Resilience through the Environmental Footprints and Their Determinants: A Panel Data Approach for G7 Countries. Sustainability, 16(17), 7746. https://doi.org/10.3390/su16177746 /*ref*/Mohamud, I. H., & Warsame, Z. A. (2024). Towards Sustainability: The Effect of External Debt and FDI on Economic Growth in Somalia. International Journal of Sustainable Development & Planning, 19(12). /*ref*/Onafowora, O., & Owoye, O. (2019). Public debt, foreign direct investment and economic growth dynamics: Empirical evidence from the Caribbean. International Journal of Emerging Markets, 14(5), 769-791. https://doi.org/10.1108/IJOEM-01-2018-0050 /*ref*/Rasheed, M., & Tahir, M. (2024). Sovereign Debt Crises: Impact on Domestic Governance, Political and Economic Stability. Journal of Development and Social Sciences, 5(2), 490-497. /*ref*/Spratt, S., & Bernini, M. (2010). Measuring economic resilience and vulnerability: Towards an international index. In Second Annual ESRC Development Economics Conference’, Manchester. /*ref*/Talla, K. H. O. U. L. E. (2023). Structural vulnerability, economic resilience and attractiveness of foreign direct investment in WAEMU countries. African Scientific Journal, 3(18), 517-517. DOI : https://doi.org/10.5281/zenodo.8145352 /*ref*/Tsiotas, D., & Katsaiti, M. S. (2024). A 3D index for measuring economic resilience with application to modern financial crises. Journal of International Development. https://doi.org/10.1002/jid.3957 /*ref*/Vinokurov, E., Lavrova, N., & Petrenko, V. (2020). Tajikistan and the Kyrgyz Republic Post-COVID-19: Debt Sustainability, Financing Needs, and Resilience to Shocks (August 27, 2020). EFSD Working Paper 2020/3, Available at SSRN: https://ssrn.com/abstract=4030640 /*ref*/Yangailo, T. (2024). The Impact of Foreign Direct Investment on Economic Growth in Zambia: A Comprehensive Analysis. Revista Científica Profundidad Construyendo Futuro, 21(21), 62-69. https://doi.org/10.22463/24221783.4637 Derechos de autor 2025 Universidad Francisco de Paula Santander https://creativecommons.org/licenses/by-nc/4.0 |
| spellingShingle | Resiliencia económica Inversión extranjera directa Servicio de la deuda Estabilidad del crecimiento del PIB Países en desarrollo Economic Resilience Foreign Direct Investmen Debt Service GDP Growth Stability Developing Countries Yangailo, Tryson The Interplay of Debt Service, FDI, and GDP Growth on Economic Resilience Across Developing Regions |
| title | The Interplay of Debt Service, FDI, and GDP Growth on Economic Resilience Across Developing Regions |
| title_alt | La interacción entre el servicio de la deuda, la inversión extranjera directa y el crecimiento del PIB en la resiliencia económica de las regiones en desarrollo |
| title_full | The Interplay of Debt Service, FDI, and GDP Growth on Economic Resilience Across Developing Regions |
| title_fullStr | The Interplay of Debt Service, FDI, and GDP Growth on Economic Resilience Across Developing Regions |
| title_full_unstemmed | The Interplay of Debt Service, FDI, and GDP Growth on Economic Resilience Across Developing Regions |
| title_short | The Interplay of Debt Service, FDI, and GDP Growth on Economic Resilience Across Developing Regions |
| title_sort | interplay of debt service fdi and gdp growth on economic resilience across developing regions |
| topic | Resiliencia económica Inversión extranjera directa Servicio de la deuda Estabilidad del crecimiento del PIB Países en desarrollo Economic Resilience Foreign Direct Investmen Debt Service GDP Growth Stability Developing Countries |
| topic_facet | Resiliencia económica Inversión extranjera directa Servicio de la deuda Estabilidad del crecimiento del PIB Países en desarrollo Economic Resilience Foreign Direct Investmen Debt Service GDP Growth Stability Developing Countries |
| url | https://revistas.ufps.edu.co/index.php/profundidad/article/view/5133 |
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