Public debt, investment and development among emerging economies in Sub-Saharan Africa

Abstract

This paper examines the extent to which public debt and strands of different sources of investments impact long-term development among Sub-Saharan African economies. Compared to related studies, development in this study is proxied by a more holistic index instead of GDP growth and its variants often employed in existing studies. Empirical analysis examining the key objectives of the study uses the continuously updating estimator (CUE) methodology by Hansen et al. (1996). Various empirical estimates show that public debt and government consumption expenditures exert significant negative impact on long-term development. The results further show that for the sub-region, effective governance and institutional effectiveness may not mitigate the negative impact of public debt on development. We also find that macroeconomic uncertainty exacerbates the negative impact of public debt on development among economies in the sub-region.