ON THE DETERMINANTS OF THE EXTERNAL DEBT LEVEL OF AFRICAN COUNTRIES IN THE FRANC ZONE: THE ROLE OF POLITICAL FACTORS

Abstract

This paper assesses the role of political factors as determinants of the external debt level of African countries in the Franc Zone1 over the period 1985-2013. Based on a logit in panel, our results show that the more a country is politically stable, the lower the external debt compared to the gross domestic product. Political stability multiplies 1.18% the chances of being in the sustainable zone of external indebtedness. Thus, countries with good political institutions experience less severe external debt effects than countries with poor political institutions.

Keywords

• external debt, political factors, franc zone.