Melola Discovery

← Melola Discovery

Open access Jurnal SINTA 1

Effect of Trade Surplus on External Debt in Developing Countries: Evidence from General-to-Specific Model

Gadjah Mada International Journal of Business (GamaIJB) · Vol. 28 No. 1 (2026) · pp. 75–91

DOI
10.22146/gamaijb.116093
ISSN
2338-7238, 1411-1128
Published
2026-02-09
Publisher
Master in Management, Faculty of Economics and Business, Universitas Gadjah Mada
Language
eng
License
creativecommons.org/licenses/by-sa/4.0

Abstract

This paper examines the impact of trade openness towards external debt levels in low- and middle-income countries from 1980-2021. Using panel estimation of Fixed Effects (FE) and the General-to-Specific (GETS), the researchers segregated into Model 1 and Model 2, which Model 2 purposely to identify the interaction of international reserves as a potential medium to relate the impact of trade openness and external debt. The finding suggests that independent variables such as GDP growth rate, current account balance, and trade openness are highly significant variables that influence the external debt in the 50 LMICs. The researchers also found a robust interaction between trade openness and international reserves in determining external debt. The result confirms that the positive direct relationship of trade openness increases its coefficient from 0.10% to 0.14% after incorporating the interaction of international reserves in Model 2. The statistical evidence suggests that the inverse interactions of international reserves on trade openness significantly negatively affect external debt. Moreover, the result prevails, continuing to be positive and highly significant. Hence, the researchers can relate that an inverse impact of trade openness on international reserves has negatively affected external debt.

Keywords

Collaboration network of the authors

4 authors · 4 co-authorship links · 2 across different organisations

Hover or tap a name to highlight its co-authors. Double-click to open the author's page.

  • Universiti Teknologi MARA
  • Universiti of Malaysia Sabah
  • Different organisations
  • Same organisation
  • Affiliation unknown
  • Thicker line = more joint articles · bigger circle = more articles
Show as table
Co-authorOrganisationJoint articles
Jaratin LilyUniversiti of Malaysia Sabah1
Imbarine BujangUniversiti Teknologi MARA1

Affiliations come from OpenAlex; journal OAI-PMH metadata carries none. Authors without an OpenAlex ID are matched by name, which can merge or split people.

Metadata source: OAI-PMH (metadata jurnal) https://journal.ugm.ac.id/gamaijb/oai, first harvested 28 Okt 2026, last seen 1 Nov 2026.
Original metadata (oai_dc) 
<oai_dc:dc xmlns="http://www.openarchives.org/OAI/2.0/" xmlns:dc="http://purl.org/dc/elements/1.1/" xmlns:oai_dc="http://www.openarchives.org/OAI/2.0/oai_dc/" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" xsi:schemaLocation="http://www.openarchives.org/OAI/2.0/oai_dc/  http://www.openarchives.org/OAI/2.0/oai_dc.xsd">
	<dc:title xml:lang="en-US">Effect of Trade Surplus on External Debt in Developing Countries: Evidence from General-to-Specific Model</dc:title>
	<dc:creator>Karia, Abdul Aziz</dc:creator>
	<dc:creator>Hakim, Taufik Abd</dc:creator>
	<dc:subject xml:lang="en-US">Business; Management</dc:subject>
	<dc:subject xml:lang="en-US">External debt, trade openness, international reserves, remittance inflows, general-to-specific model.</dc:subject>
	<dc:subject xml:lang="en-US">F10; F34; F40</dc:subject>
	<dc:description xml:lang="en-US">This paper examines the impact of trade openness towards external debt levels in low- and middle-income countries from 1980-2021. Using panel estimation of Fixed Effects (FE) and the General-to-Specific (GETS), the researchers segregated into Model 1 and Model 2, which Model 2 purposely to identify the interaction of international reserves as a potential medium to relate the impact of trade openness and external debt. The finding suggests that independent variables such as GDP growth rate, current account balance, and trade openness are highly significant variables that influence the external debt in the 50 LMICs. The researchers also found a robust interaction between trade openness and international reserves in determining external debt. The result confirms that the positive direct relationship of trade openness increases its coefficient from 0.10% to 0.14% after incorporating the interaction of international reserves in Model 2. The statistical evidence suggests that the inverse interactions of international reserves on trade openness significantly negatively affect external debt. Moreover, the result prevails, continuing to be positive and highly significant. Hence, the researchers can relate that an inverse impact of trade openness on international reserves has negatively affected external debt.</dc:description>
	<dc:publisher xml:lang="en-US">Master in Management, Faculty of Economics and Business, Universitas Gadjah Mada</dc:publisher>
	<dc:contributor xml:lang="en-US"></dc:contributor>
	<dc:date>2026-02-09</dc:date>
	<dc:type>info:eu-repo/semantics/article</dc:type>
	<dc:type>info:eu-repo/semantics/publishedVersion</dc:type>
	<dc:type xml:lang="en-US">Peer-reviewed Article</dc:type>
	<dc:format>application/pdf</dc:format>
	<dc:identifier>https://journal.ugm.ac.id/gamaijb/article/view/116093</dc:identifier>
	<dc:identifier>10.22146/gamaijb.116093</dc:identifier>
	<dc:source xml:lang="en-US">Gadjah Mada International Journal of Business; Vol 28, No 1 (2026): January; 75-91</dc:source>
	<dc:source>2338-7238</dc:source>
	<dc:source>1411-1128</dc:source>
	<dc:language>eng</dc:language>
	<dc:relation>https://journal.ugm.ac.id/gamaijb/article/view/116093/43466</dc:relation>
	<dc:rights xml:lang="en-US">Copyright (c) 2026 Gadjah Mada International Journal of Business</dc:rights>
	<dc:rights xml:lang="en-US">http://creativecommons.org/licenses/by-sa/4.0</dc:rights>
</oai_dc:dc>