Does growth heterogeneity matter for debt dynamics? Sectoral evidence from an emerging economy

El Mehdi Chakir ,Soussi Noufail Outmane

doi:10.24294/jipd026130020

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Does growth heterogeneity matter for debt dynamics? Sectoral evidence from an emerging economy

El Mehdi Chakir

Soussi Noufail Outmane

Journal of Infrastructure Policy and Development 2026, 10(1), 026130020; https://doi.org/10.24294/jipd026130020

Submitted：24 Mar 2025

Accepted：08 May 2026

Published：19 May 2026

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Abstract

This paper analyzes the drivers of public debt dynamics in Morocco using an accounting-based decomposition of the debt accumulation. The study quantifies the respective contributions of interest costs, economic growth, and the primary balance to changes in the debt-to-GDP ratio, and further decomposes the growth component into agricultural and non-agricultural sources. The results show that debt dynamics are primarily shaped by the interaction between interest payments and the denominator effect of growth, highlighting the dominant role of the interest–growth differential in mechanical debt accumulation. The primary balance emerges as a key policy-driven component, with years of fiscal slippage closely aligned with marked increases in the debt ratio. The sectoral decomposition indicates that the stabilizing effect of growth is structurally anchored in non-agricultural-activity, while agricultural growth is comparatively volatile. This paper provides a policy-oriented application of debt decomposition to a structurally dual emerging economy. By explicitly distinguishing agricultural and non-agricultural growth contributions, the analysis offers additional empirical insights into how growth composition shapes the stability of debt trajectories in climate-sensitive economies. The results suggest that aggregate growth should not be interpreted as a homogeneous stabilizer in dual economies, with important implications for fiscal sustainability assessments in emerging markets.

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References

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