Effect of External Public Debt on Economic Growth: an Empirical Analysis of East African Countries

CHAPTER FOUR 
RESULTS 
4.1 Descriptive Statistics 
The descriptive statistics for the variables used in the study are presented in Table 4.1. The table 
shows that each of the eight variables had 136 observations. The mean of external debt, labour 
force, capital stock, and domestic debt were relatively higher than those of GDP and interest rate. 
The variables seemed not to be normally distributed since their skewness were either more or 
less than zero. All the variables except GDP and interest rate were positively skewed. 
Additionally, the variables seemed to have a relatively peaked distribution since their kurtosis 
were positive.
Table 4.1: Descriptive statistics
Variable 
Obs. 
Mean 
Std. dev. 
Variance
Skewness 
Kurtosis
GDP 
136 
4.8078 
6.3675 
40.5447 
-4.0463 
45.9413 
External 
debt 
136 
4.55e+09 
3.25e+09 
1.05e+19 
0.6214 
2.9611 
Labour force 
136 
1.03e+07 
5334870 
2.85e+13 
0.587972 
2.901662 
Inflation
136 
11.54094 
8.90547 
79.3074 
1.3877 
4.6995 
Exchange 
rate 
136 
574.4387 
680.6396 
463270.3 
1.2593 
3.6303 
Capital stock 
136 
2.71e+09 
3.28e+09 
1.08e+19 
1.8693 
6.0795 
Domestic 
debt 
136 
1204541 
1726260 
2.98e+12 
1.6031 
4.3791 
Interest rate 
136 
5.4670 
12.8223 
164.4123 
-2.4763 
11.1128 

---

30 
4.2 Correlation 
The correlations between the variables are presented in Table 4.2. All the variables had a perfect 
correlation with themselves as was expected. Labour force and inflation had a statistically 
significant correlation with external debt. Exchange rate had a significant correlation with GDP, 
inflation, and labour force. Capital had a significant correlation with external debt, labour force, 
and exchange rate. Interest had a significant correlation with only exchange rate. By contrast, 
domestic debt had a significant correlation with all variables except external debt. Since most of 
the correlations were statistically significant, multicollinearity was likely to be a problem in the 
data.
Table 4.2: Correlation matrix
GDP 
External 
debt 
Labour 
force 
Inflation
Exchange 
rate 
Capital 
stock 
Domestic 
debt 
Interest 
rate 
GDP 
1.0000 
External debt 
0.0100 
(0.9079) 
1.0000 
Labour force 
0.0817 
(0.3444) 
0.8349* 
(0.0000) 
1.0000 
Inflation
-0.1618 
(0.0598) 
0.2836* 
(0.0008) 
0.1233 
(0.1526) 
1.0000 
Exchange 
rate 
0.2109* 
(0.0137) 
0.0509 
(0.5565) 
0.4215* 
(0.0000) 
-0.2639* 
(0.0019) 
1.0000 
Capital stock 
0.0805 
(0.3515) 
0.7302* 
(0.0000) 
0.7456* 
(0.0000) 
0.0846 
(0.3273) 
0.2897* 
(0.0006) 
1.0000 
Domestic 
debt 
0.1728* 
(0.0443) 
0.1231 
(0.1532) 
0.4358* 
(0.0000) 
-0.2327* 
(0.0064) 
0.8902* 
(0.0000) 
0.4080* 
(0.0000) 
1.0000 
Interest rate 
0.1097 
(0.2034) 
0.1636 
(0.0570) 
0.0830 
(0.3369) 
-0.1416 
(0.1002) 
0.2526* 
(0.0030) 
0.0952 
(0.2702) 
0.0819 
(0.3432) 
1.0000 
Where * means statistically significant at 5% and the figures in parentheses are p-values