Journal Article

Debt relief and good governance: new evidence of developing countries for the period 1990-2013

Freytag, A., Schmied, J.
Applied Econometrics and International Development , 19:1, 15–32 (2019)
Open Access


After the introduction of the HIPC Initiative in the early 2000s, indebted LICs had to show a decent governance performance before their debts were forgiven. We discuss the hypothesis that during the follow-up initiatives debt relief decisions refrained from this policy. We test different political economy theories by applying dynamic panel models to a set of debtor countries. We demonstrate that improvements in governance quality led to higher levels of debt forgiveness in 2000-2004, but not in the subsequent periods. 
Keywords: Debt relief, Institutions, HIPC Initiative, MDRI, Governance

The Max Planck Institute for Demographic Research (MPIDR) in Rostock is one of the leading demographic research centers in the world. It's part of the Max Planck Society, the internationally renowned German research society.