Abstract

The paper aims to determine the impact of external debt on economic growth in the ECOWAS region. Panel data spanning from 1990 to 2016 is used and analyzed using panel CS-ARDL estimation approach. The results indicate cointegration among the variables. The paper found that external debt has a positive impact on economic performance up to a threshold. In the short run, the threshold stood at 45% and in the long run, it stood at 42.52%. Beyond these points, additional external debt accumulation negatively affects the regional economic performance. Knowing that the level of the region’s external debt-to-GDP ratio stood at 33.11% in 2018 (below the threshold), it appears that external debt has not yet hampered economic performance in the ECOWAS region. However, there is a need for caution given the fast rate of increase (25% in six years) of external debt accumulation in the region.

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