External Debt, Investment, and Financial Development in Botswana and South Africa: A Multivariate Causal Analysis

This paper employs a multivariate Granger-causality model to evaluate the causal relationship between external debt, financial development, and investment in Botswana South Africa from 1980–2020. The study includes savings, trade, economic growth as intermittent variables. Using autoregressive distributed lag (ARDL) bounds testing approach; empirical results reveal that, for both Africa, there is no distinct short- long-run debt either development and/or investment. However, Botswana, short-run unidirectional development. While opposite true. That is, policy implication stimulate real sector short run; immense efforts promoting are recommended. Other support concurrent promotion of investment, because these variables found have bidirectional relationship. For it primarily that drives growth. Therefore, should promote long run.