The impact of public debt on economic growth: The case of Turkey and PIIGS countries

In the globalizing world, countries resort to borrowing to finance public expenditures required for growth and development processes due to the inadequacy of tax and similar revenues. Public borrowing, which has been steadily increasing in recent periods, has now become the ordinary income of the public sector, and this situation has made the issue of the direction and magnitude of the effect of public debt on economic growth frequently discussed today. The relationship between public debt and economic growth is important for both developed and developing countries. In developing countries, government borrowing is resorted to primarily because savings are insufficient to finance the investments required for development. The aim of the study is to determine the effects of public debt on economic growth in the PIIGS country group, which consists of Portugal, Ireland, Italy, Greece and Spain, which are seen as the most fragile economies of the Eurozone, and Turkey in particular. In this respect, in order to investigate the effects of public debt on economic growth, an econometric analysis based on panel data analysis was conducted in the light of statistical data for the period 1998-2022. According to the findings, public debt has a statistically significant positive effect on GDP growth in Turkey and PIIGS countries. This result emphasizes the importance of determining public borrowing policies well and determining the optimal policy in order for Turkey and PIIGS countries to achieve economic growth and development.