TY - JOUR
T1 - Inflation, Indebtedness and Human Development
T2 - Panel Evidence From Southern Africa
AU - Chipunza, Tamisai
AU - Ntsalaze, Lungile
AU - Kunaka, Brian Wiston
AU - Chikosha, Tapfumanei
N1 - Publisher Copyright:
© The Author(s) 2026. This article is distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 License (https://creativecommons.org/licenses/by-nc/4.0/) which permits non-commercial use, reproduction and distribution of the work without further permission provided the original work is attributed as specified on the SAGE and Open Access pages (https://us.sagepub.com/en-us/nam/open-access-at-sage).
PY - 2026/1/1
Y1 - 2026/1/1
N2 - While it is hypothesised that inflation and external debt stifle human development, empirical findings on this relationship have been equivocal. This study investigated the impact of inflation and external debt on human development (proxied by the Human Development Index) in 14 Southern African Development Community (SADC) countries. Estimations were based on the two-step system Generalised Method of Moments (GMM). The results of pooled Ordinary Least Squares (POLS) and difference GMM were also reported for robustness. It was established that inflation and external debt stifle human development. Based on these results, policies to reduce inflation and external indebtedness are necessary for human development in the SADC region. To control inflation, SADC countries should avoid monetising budget deficits. Regarding external debt, SADC countries should diversify exports, boost foreign currency earnings, and reduce indebtedness. SADC countries should also allocate borrowed funds for infrastructural development, for example, railways, roads, and electricity. This is the first study to investigate the effect of external debt on human development among SADC countries. Moreover, an estimation technique robust to endogeneity bias and heteroscedasticity is adopted.
AB - While it is hypothesised that inflation and external debt stifle human development, empirical findings on this relationship have been equivocal. This study investigated the impact of inflation and external debt on human development (proxied by the Human Development Index) in 14 Southern African Development Community (SADC) countries. Estimations were based on the two-step system Generalised Method of Moments (GMM). The results of pooled Ordinary Least Squares (POLS) and difference GMM were also reported for robustness. It was established that inflation and external debt stifle human development. Based on these results, policies to reduce inflation and external indebtedness are necessary for human development in the SADC region. To control inflation, SADC countries should avoid monetising budget deficits. Regarding external debt, SADC countries should diversify exports, boost foreign currency earnings, and reduce indebtedness. SADC countries should also allocate borrowed funds for infrastructural development, for example, railways, roads, and electricity. This is the first study to investigate the effect of external debt on human development among SADC countries. Moreover, an estimation technique robust to endogeneity bias and heteroscedasticity is adopted.
KW - external debt
KW - government effectiveness
KW - human development index
KW - public debt
KW - system GMM
UR - https://www.scopus.com/pages/publications/105027542928
U2 - 10.1177/21582440251413959
DO - 10.1177/21582440251413959
M3 - Article
AN - SCOPUS:105027542928
SN - 2158-2440
VL - 16
JO - SAGE Open
JF - SAGE Open
IS - 1
ER -