- Title
- The causal relationship between savings and economic growth in the Southern African development community
- Creator
- Nsenga, Dieu Donne Katamba
- Subject
- Saving and investment -- Developing countries
- Date Issued
- 2018
- Date
- 2018
- Type
- Thesis
- Type
- Masters
- Type
- MCom
- Identifier
- http://hdl.handle.net/10948/17409
- Identifier
- vital:28337
- Description
- Promoting high domestic savings rates in order to boost economic growth is one of the SADC macroeconomic targets. Based on both the Solow’s (1956) and the endogenous “AK” growth models that predict a positive relationship between savings and economic growth in a closed economy, and on the Aghion-Comin-Howitt’s (2006) hypothesis that assumes a positive relationship between savings and economic growth in an open economy, two separate empirical models were constructed to test the long-run relationship and the causality between savings and economic growth in the SADC region. To this end, annual time series data for ten SADC member states obtained from the World Bank Indicators over the period 1985-2015 were pooled. The Panel ARDL/Pooled Mean Group estimator developed by Pesaran, Shin and Smith (1997) was performed to analyse the data. The main findings are that domestic savings is positively related to GDP in an open economy, whereas in a closed economy, it is insignificant. In addition, the speed of adjustment revealed a bi-directional causality between savings and economic growth. However, the speed of adjustment is much slower when the model is estimated with savings as the dependent variable but faster when GDP is regressed as the dependent variable. Thus, SADC member states are encouraged to implement policies that promote domestic savings as well as attract foreign direct investments, in order to boost economic growth. GDP growth will, in turn, increase the level of domestic savings.
- Format
- x, 105 leaves
- Format
- Publisher
- Nelson Mandela University
- Publisher
- Faculty of Business and Economic Sciences
- Language
- English
- Rights
- Nelson Mandela University
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