Promoting Per Capita Income Through Sustainable External Debt Management And Inflation Dynamics: Evidence From Selected African Countries
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Abstract
Per capita income is a key indicator of economic welfare because it reflects the average income available to individuals and serves as a measure of living standards and economic development. This study investigates the effects of external debt dynamics and inflation shocks on per capita income in Africa from 2010 to 2025 using a panel dataset. External debt, external debt stock, external debt servicing, external debt shocks, inflation rate, inflation shocks, and exchange rate were included as explanatory variables. The panel ARDL model was employed to estimate both short run and long run relationships, while FMOLS and DOLS were used to verify the robustness of the results. The ARDL findings indicate that external debt related variables and inflation shocks significantly reduce per capita income, suggesting that excessive indebtedness and macroeconomic instability undermine economic welfare. The FMOLS and DOLS estimates reveal mixed effects across specifications, highlighting the importance of debt management and macroeconomic conditions in shaping income outcomes. The study concludes that sustainable debt management, effective inflation control, productive use of borrowed funds, enhanced revenue mobilisation, and prudent monetary policies are essential for improving per capita income and promoting long run economic development across African economies.....
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