Although literature has given considerable attention to the effects of foreign debt on growth, we still know little about its effects on the internal potential for capital formation. Literature suggests a number of channels through which the availability of foreign financing could affect...

Although literature has given considerable attention to the effects of foreign debt on growth, we still know little about its effects on the internal potential for capital formation. Literature suggests a number of channels through which the availability of foreign financing could affect...

This paper approaches the question of potential causality between foreign debt and domestic savings in the context of developing countries. Literature provides evidence in as far as foreign debt and development is concerned, but little attention was given so far to internal potential for capital...