Factors influencing savings as a driver of economic growth in emerging economies (BRICS).
Date
2014-07-25
Authors
Nju, Rannibele Nkamanyi
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Abstract
ABSTRACT
This paper empirically examines the factors influencing savings as a driver of
economic growth in emerging economies (BRICS) during the period 1997-2011.
To perform this analysis, the study employed the real gross domestic product,
financial development, terms of trade, real interest rate, dependency ratio, and
inflation rate and government expenditure as determinants of savings. The
study applied both time series analysis and balanced panel model data. For the
times series, it used the Ordinary Least Square (OLS) while it used Least
Square Dummy Variable (LSDV) and Random Effect Model (REM) econometric
methodologies for the panel analysis.
Country specific analysis for each of the BRICS countries indicate that more
liberal policies and trade facilities present opportunities for increasing savings in
Russia, large market growth attracts savings in all the countries except Brazil,
increase inflation rate have unfavourable effects on savings in India and South
Africa, higher real interest rates attracts savings in Brazil and China and a high
level of dependency ratio decreases savings in China.
This finding suggests that though these five most emerging nations in the world
appear to be similar, referred to as a bloc using the acronym BRICS, their
differences in institutional and governmental framework and policies influence
the economy in diverse ways resulting in dissimilar drivers of economic
conditions. However, further deepening through financial sector liberalization
and trade liberalization in these countries will be an important instrument in
stimulating investment through more savings and therefore more long-run
economic growth.
Description
MBA 2013
Keywords
Saving and investment -- Developing countries,Investments -- Government policy,Developing countries -- Economic conditions.