The Comparison Of Economic Effects Of Foreign Debt Between Developing Countries And Developed Countries And Its Enlightenment To China

The outbreak of the debt crisis in Europe shocked the world,causing great concern in political and academic circles,the issue of foreign debt once again become the focus of discussion.It can produce such a big reaction not only because of the consequences of the European debt crisis.The seriousness of the problem is that most of the countries and regions in the world have foreign debts.In these areas,fast rise of emerging market countries has drawn our attention.There is a relative lack of understanding in this area.Later,this paper plans to study and compare the economic effect of foreign debt of developing countries and developed countries,in order to obtain useful results for other developing countries for reference.After reviewing the developing and developed debt situation,the new classical economic growth model was established based on the empirical research,the analysis on the effect of foreign debt on the developing countries and developed countries,capital and labor.Based on the economic data of 30 representative developing countries 1987-2016 and 1996-2016 in developed countries,this paper constructs the panel data model and makes regression analysis.The empirical results show that the effects of foreign debt on the developing countries and developed countries,capital and labor are: on the one hand,foreign investment can promote domestic capital formation in developed countries,promote the development of economy,the economy has a positive effect,but has a negative effect on capital accumulation in developing countries;on the other hand,it will reduce the labor force participation rate in developed countries,while the developing countries play a role in promoting the growth of the labor force.Based on the empirical conclusions,this paper examines some of the successful and failed examples of foreign debt references in order to find out the reasons for the different outcomes in the actual use of foreign debts.Through comparative analysis,this paper finds that the external debt management system plays a very important role in the use of external debt.