Implications of globalization on growing external debt in eight transition economies

Jeločnik, Marko and Zubović, Jovan and Đukić, Mihajlo (2016) Implications of globalization on growing external debt in eight transition economies. In: Global perspectives on trade integration and economies in transition. Information Scienc Reference, Hershey, PA, pp. 80-104. ISBN 978-1-5225-0452-8

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Abstract

External debt accumulation is a common feature of transition economies during the process of economic transformation. Insuicient domestic resources and low savings as typical problems in these countries have to be fulilled through some form of external capital. This chapter analyzes determinants and trends of external borrowing in eight transition European economies. It is shown that despite a positive correlation between external debt and economic growth in the initial phases of transition, its further accumulation is associated to higher risks in terms of macroeconomic stability. This has also been proved during the recent economic crisis when external debt in most of countries recorded sharp rise. If further trends of rising external debt accumulation continue, observed economies might face serious economic problems related to debt repayment and lower growth perspectives.

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