Excessive public debt as a threat to the development of modern economies

Abstract

Research background: Public debt is a key category of public finance in the modern state. Its importance increased during the overcoming of the effects of the major crises of the 21st century (the financial crisis of 2007+, the crisis caused by COVID-19, and the energy crisis of 2022). However, there are justified concerns that highly developed countries 'abuse' public debt to achieve short-term economic goals, which may result in a  weakening of their long-term development prospects.

Purpose: Seeking answers to the questions: what are the main causes and consequences of the unprecedented growth of public debt in highly developed countries since the beginning of the 21st century, what threats arise from this, and what measures are (or could be) taken by these countries to mitigate the negative impact of excessive public debt on long-term economic growth prospects.

Methodology: In the analyses undertaken in the article, the results of research on public debt conducted in global  financial centers were used; however, they were subjected to critical evaluation and verification based on the author's own views and data (mainly) from the World Bank and the OECD.

Findings: Research presented in the article indicates that the accumulation of public debt in highly developed countries stems from both systemic and ad hoc factors. The phenomenon itself poses many significant threats to the long-term prospects of economic development. In order for the increasing public debt not to become a key developmental barrier, highly developed countries implement (or may implement in the future) a range of 
remedial measures to ease the debt burden.

Practical implications: The article assesses the effects of increasing public debt on the prospects for economic  development, among others in connection with the projected growth of public debt in Poland in the coming years. It therefore contributes to the discussion taking place in Poland on this important topic.

Originality / value: The article is an attempt at an author's assessment of an important economic phenomenon, which is the rapid growth of public debt in highly developed countries. This assessment is made based on an analysis of the latest data, positions, and views on this subject.