Debt Accumulation and Economic Growth in Emerging Market Economies: Is Debt Promoting or Hindering Growth?

The International Monetary Fund (IMF) recently warned of the growing accumulation of debt in emerging market economies (EMEs) and the potential for debt crises, a clear warning for investors (Allen, 2018). While the IMF suggests investors may be better served elsewhere, EMEs hold an integral role in the international market as consumers, producers, and entrepreneurs. Despite regular research on advanced economies, middle income countries like EMEs are often ignored. As EMEs grapple with their inability to overcome the current increase in the value of the US Dollar, this study works to understand how debt impacts economic growth and other governance indicators hindering growth through regression analysis. Analyzing EMEs will include variables drawn from World Bank and IMF databases including external debt stocks, regulatory quality estimates, and corruption control estimates. The results will assist in determining what policy options are best to promote economic stability in EMEs, an important task as their impact on the global economy continues to grow. This study will be part of a growing body of research aiming to help EMEs become fully advanced economies