ASSESSING THE ROLE OF EXTERNAL DEBT IN ECONOMIC GROWTH OF THE ASEAN-4 COUNTRIES: AN EMPIRICAL STUDY

The Asian Financial Crisis in 1997 witnessed an episode of high accumulation of external debt among the crisis-hit countries, namely Indonesia, Malaysia, Philippines and Thailand. This leads to the issue of the role played by external debt in stimulating the economies of ASEAN-4 countries. This paper tries to examine the role of external debt in the economies of the ASEAN-4 countries. The results demonstrate that external debt plays a role in improving the economic growth of the ASEAN-4 countries. In addition, the accumulation of external debt is positively associated with Indonesia’s and Thailand’s economic growth up to an optimal level, beyond the optimal level the external debt has inversely contributed to the economy.