External debt crisis & socio-economic fallout: Evidence from the BRICS nations

This paper aims to investigate how external debt influences selected socio-economic variables in a sample of the five biggest emerging nations of the world, i.e., the BRICS block from 1996 to 2020. The data was found to have cross-sectional dependence, which was addressed by using second-generation unit root tests of CIPS and CADF. Cross-sectional dependence was further effectively addressed using the techniques of FMOLS. The study uses the ARDL models to achieve the desired objective. Dumitrescu Hurlin’s (DH) panel causality analysis was adopted to analyze the variables' causality. The study found that, in the long run, External Debt has a positive impact on Unemployment and Life Expectancy while it has a negative impact on Net National Income. The results are also consistent in the short run, except in the case of unemployment, which has been shown to reduce with an increase in the external debt component of the country.