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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:External Shocks and the HIPC Initiative: Impacts on Growth and Poverty in Africa
Authors:Hussain, M. NureldinISNI
Gunter, Bernhard G.ISNI
Periodical:African Development Review
Geographic term:Africa
Subjects:debt relief
terms of trade
economic development
poverty reduction
Economics and Trade
Abbreviation:HIPC=Heavily Indebted Poor Country
External link:https://onlinelibrary.wiley.com/doi/10.1111/j.1017-6772.2006.00124.x/pdf
Abstract:Using a simple macroeconomic model, the authors estimate the impact of debt relief and terms of trade shocks on growth and poverty in African countries. For the 18 heavily indebted poor countries (HIPCs) that reached the enhanced HIPC decision point by end December 2000, the basic quantitative findings are that HIPC debt relief has boosted economic growth in these countries by an average of 2.9 percent per annum and that the computed result of this increase in growth is a reduction in poverty by an average of 2.2 percent per annum. However, the paper shows that recent deteriorations in the terms of trade have counterbalanced these positive effects by lowering growth by an average of 2.0 percent per annum and by increasing poverty by an average of 1.3 percent per annum. The paper also estimates the net effect on growth and poverty of the recently agreed 100 percent multilateral debt relief. This is predicted to boost economic growth by an average of 5 percent per annum and reduce poverty by about 5.3 percent per annum for the group of all African HIPCs. The paper concludes that 100 percent debt relief is crucial for Africa, but that more aid and policies need to be focused on a long-term development strategy that fosters the necessary structural transformation. Bibliogr., notes, ref., sum. [Journal abstract]