One of the significant sources of revenue for a nation’s economic growth is international loans from relevant financial institutions. The journal article “External Debt and Economic Growth: The Case of Emerging Economy” by Sami Al Kharusi and Mbah Stella Ada highlights some of the impacts of external debts on a nation’s economic growth (Kharusi & Ada, 2018). Most nations globally face various challenges in financing their annual budgets since their Gross Domestic Product (GDP) cannot be enough for the needs of the nation. The main reason for choosing this article is because it outlines the major relationships between the government’s external borrowing and a nation’s economic performance.
This article is greatly related to economics and economic growth because it majorly portrays how the government should utilize resources from external institutions to improve its economic performance. Financial resources acquired from other nations may become a liability to a nation if they are not utilized appropriately (Kharusi & Ada, 2018). One major factor that may hinder economic growth from external debts is corruption, which involves the embezzlement of funds by government officials.
The article encourages most governments to utilize external loans by investing in other income-generating initiatives, such as a nation’s transport and communication system, to enhance trading activities (Kharusi & Ada, 2018). A nation with appropriate infrastructural development enjoys steady economic growth due to trading activities, which are major sources of revenue through taxation.
The article also portrays some of the important approaches that the government of a nation should undertake to ensure that they are in a position to service all its external debts. Public investments are one of the major factors that the authors have encouraged the government to pursue to increase revenue (Kharusi & Ada, 2018). Public investments involve the use of government finances to develop other income-generating initiatives such as public-owned manufacturing industries and corporations, which provide jobs to the people, which is a sign of economic growth.
Reference
Kharusi, S. A., & Ada, M. S. (2018). External debt and economic growth: The case of emerging economy. Journal of Economic Integration, 33(1), 1141–1157. Web.