•  
  •  
 

Keywords

Public debt, debt-to-gdp, infrastructure indicators, human development index benchmark, panel data analysis.

Disciplines

Business

Abstract

The level of public debt as a percentage of GDP (the debt-to-GDP ratio) has expanded in Arab countries as a result of chronically high budget deficits, which undermine the ability of these countries to invest in infrastructure such as healthcare, education, and other productive sectors. This paper uses panel data from 19 Arab countries from 2000 to 2020 to examine the impact of public debt on infrastructure. The Generalized Least Squares regression, in which the Hausman test was used to determine whether the model should follow a random effect or a fixed effect, was employed after the Ordinary Least Squares regression. Two infrastructure indicators that use the old and new Human Development Index as a benchmark have been created. The results showed that debt-to-GDP has a negative impact on the infrastructure index. The fixed-effects results indicated that the infrastructure indicator based on the new human development index was better explained than that based on the old one, supporting the new HDI hypothesis, which has been shown to be a more reliable indicator. Based on the findings, it is recommended to explore how institutional quality affects the relationship between public debt and infrastructure, as strong institutions can properly guide the use of public debt to reduce its negative impact on infrastructure.

Author ORCID Identifier

https://orcid.org/0000-0001-5245-6462

DOI

https://www.doi.org/10.54729/DRSK7970

ISSN

2664-9446

Included in

Business Commons

Share

COinS
 
 

To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.