This study investigates the causal relationship between public and private external debt and economic growth in developing countries. Our model includes 18 selected Asian developing and transition economies from 1995 thru 2019. We employ the dynamic heterogeneous panel data methods, pooled mean group (PMG), robust cross-sectional augmented autoregressive distributed lag (CS-ARDL), and pairwise panel causality test. The results of PMG and CS-ARDL show the existence of causality between external debt and economic growth both in the short-run and long-run. The pairwise Granger causality test found the bidirectional causal relationship runs from total external debt, public external debt, and private external debt to economic growth and economic growth to external debt. The results showed first the existence of causality in the short-run and long-run between external debt and economic growth and the second, bi-directional causality that runs from external debt to economic growth and economic growth to external debt. Both the dynamic models and robust estimator found the same inferences about the impact of main variables on economic growth in Asian developing and transition economies. The findings of this study suggest to assure debt management, investment in productive sectors, increase domestic savings, decrease external dependency, and focus on international trade.

Abstract
1. Introduction
2. Literature Review
3. Data, Methodology, and Model Specification
    3.1. Methodology
    3.2. Model Specification
4. Results and Discussions
    4.1. Summary of Descriptive Statistics
    4.2. Cross-Sectional Dependence
    4.3. Stationarity
    4.4. Cointegration Analysis
    4.5. Dynamic Models and Existence of Causality:MG, DFE, PMG-ARDL and CS-ARDL
    4.6. The Direction of Granger Causality
5. Conclusion
References

• Biqiong ZHANG(Department of International Finance, Central University of Finance and Economics Beijing, China.)
• Muhammad DAWOOD(School of Finance, Central University of Finance and Economics Beijing, China) Corresponding Author
• Ahmed AL-ASFOUR(Director of the Center for Workforce Development, Associate Professor, Workforce Education and Development Program, School of Education, Southern Illinois University Carbondale, USA.)