Does External Financing Drive Growth?

Published on October 9, 2019 Updated on November 26, 2019

on the October 9, 2019

Focus on Research

Does External Financing Drive Growth?

Evidence for the growth impact of external financing remains open. This article revisits the question for a large sample of developing economies. Financial inflows can directly support economic growth by relaxing constraints on domestic resources, but can also indirectly weaken growth by hampering competitiveness through a real appreciation of the exchange rate.

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