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Saving And Growth In Egypt

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Author Info

  • CONSTANTINO HEVIA

    ()
    (World Bank Development Research Group, 1818 H Street, NW, Washington, DC 20433, USA)

  • NORMAN LOAYZA

    ()
    (World Bank Development Research Group, 1818 H Street, NW, Washington, DC 20433, USA)

Abstract

This study illustrates the mechanisms linking national saving and economic growth, with the purpose of understanding the possibilities and limits of a saving-based growth agenda in the context of the Egyptian economy. This is done through a simple theoretical model, calibrated to fit the Egyptian economy, and simulated to explore different potential scenarios. The main conclusion is that if the Egyptian economy does not experience progress in productivity — stemming from technological innovation, improved public management, and private-sector reforms — , then a high rate of economic growth is not feasible at current rates of national saving and would require a saving effort that is highly unrealistic. For instance, financing a constant 4% growth rate of GDP per capita with no TFP improvement would require a national saving rate of around 50% in the first decade and 80% in 25 years! However, if productivity rises, sustaining and improving high rates of economic growth becomes viable. Following the previous example, a 2% growth rate of TFP would allow a 4% growth rate of GDP per capita with national saving rate in the realistic range of 20–25% of GDP.

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Bibliographic Info

Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal Middle East Development Journal.

Volume (Year): 04 (2012)
Issue (Month): 01 ()
Pages: 1250002-1-1250002-23

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Handle: RePEc:wsi:medjxx:v:04:y:2012:i:01:p:1250002-1-1250002-23

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Related research

Keywords: Savings; economic growth; Total Factor productivity; Egypt;

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References

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  1. Douglas Gollin, 2001. "Getting Income Shares Right," Department of Economics Working Papers 2001-11, Department of Economics, Williams College.
  2. Herrera, Santiago & Youssef, Hoda & Youssef, Hoda & Zaki, Chahir, 2010. "Egypt beyond the crisis : medium-term challenges for sustained growth," Policy Research Working Paper Series 5451, The World Bank.
  3. Orazio P. Attanasio & Lucio Picci & Antonello E. Scorcu, 2000. "Saving, Growth, and Investment: A Macroeconomic Analysis Using a Panel of Countries," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 182-211, May.
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Cited by:
  1. Hevia, Constantino & Loayza, Norman, 2013. "Saving and growth in Sri Lanka," Policy Research Working Paper Series 6300, The World Bank.

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