Foreign Debt, Trade Openness, Labor Force and Economic Growth: Evidence From Sri Lanka

IUP Journal of Applied EconomicsVol. 8 Nbr. 1, January 2009News

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Summary


This study examines the role of foreign debt, trade openness and labor force in the economic growth of Sri Lanka, by employing the Johansen maximum likelihood approach of cointegration. It analyzes the data for the period, 1950-2006. The study finds that there is a cointegration relationship between economic growth and foreign debt, trade openness and labor force. Further the results suggest that in the long run, labor force, trade openness and foreign debt have a positive impact on economic growth of Sri Lanka.

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Extract


Foreign Debt, Trade Openness, Labor Force and Economic Growth: Evidence From Sri Lanka

(ProQuest: ... denotes formulae omitted.)

Introduction

The factors affecting economic growth in developing countries have been a topic of continuing debate over the last few decades. These factors include foreign debt, labor force and trade openness. It is argued that foreign debt works in form of capital, labor force contributes to the national output, and trade openness contributes to the improvement of overall economic growth. In early 1960s and 1970s, economists have argued that foreign capital and its proper utilization is one of the factors that contribute to economic growth in developing countries. Geiger (1990), Chowdhury (1994), Karagol (1999), Were (2001), Kalima (2002), Pattillo et al. (2004), and Schclarek (2004) studied the role of foreign debt in economic growth in different countries. Ram (1985), Summers (1...

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