Abstract
The process of economic development in developing nations necessitates substantial capital to implement economic programs and strategic plans. Since the investments required by these countries during specific periods often exceed their domestic financial resources, the resulting deficit must be bridged through net inflows of foreign capital namely loans and aid to fill the domestic investment resource gap. Certain ESCWA countries, including Jordan, Egypt, Lebanon, and Yemen, have consistently faced limited domestic resources for investment, compelling them to rely on external loans to meet developmental requirements. Consequently, the debt service (principal and interest) has become a significant burden on their economies. Through these funds, these nations seek to rectify structural imbalances or achieve desired structural transformations during their developmental trajectories. The impacts and shifts induced by foreign loan inflows into host countries, particularly developing ones, remain a controversial and complex subject. It raises fundamental questions regarding their efficacy in fostering genuine development. Scholarly research on this topic varies in both methodology and findings; some studies support the positive impact of external loans on economic growth, while others present opposing views. Accordingly, this study highlights the volume of foreign loan inflows to the aforementioned ESCWA countries and the resulting economic burdens, while investigating the capacity of these loans to effectuate desired structural transformations. To achieve this, a modified Chenery-Taylor model was employed to identify structural indicators, defined as follows: • Y1: Ratio of agricultural sector output to GDP at constant 1995 prices. • Y2: Ratio of industrial sector output to GDP at constant 1995 prices. • Y3: Ratio of services sector output to GDP at constant 1995 prices. • Y4: Ratio of the agricultural labor force to the total labor force. • Y5: Ratio of the industrial labor force to the total labor force. • Y6 Ratio of the services sector labor force to the total labor force. The independent variables influencing these indicators include: • X1: Ratio of total external loans to GNP at constant 1995 prices. • X2 Ratio of gross investment to GNP at constant 1995 prices. • X3 Total population (in millions). • X4: Per capita GDP at current prices. • X5: Ratio of exports to GNP at constant 1995 prices. • X6: Ratio of imports to GNP at constant 1995 prices. • Ui: The stochastic error term. The research adopts a quantitative analytical approach by constructing econometric models and utilizing multiple linear regression. Empirical results were extracted using the SPSS statistical software.
DOI
10.33095/jeas.v13i45.1146
Subject Area
Managerial
First Page
56
Last Page
58
Recommended Citation
Lajlaj, S. Z., & Yass, R. A. (2007). The Impact of External Loans Inflows on Achieving Structural Transformation in Selected ESCWA Economies (1990–2002). Journal of Economics and Administrative Sciences, 13(45), 56-58. https://doi.org/10.33095/jeas.v13i45.1146
