Diminshed Returns? The Role of Savings and Investment Rates in East Asia's Miracle
AbstractThe causes of growth in East Asia remain controversial despite substantial empirical research. In this paper I adopt the neoclassical growth model as the maintained hypothesis, and decompose growth into the exogenous variables of the neoclassical model. It is shown that the role of increased savings rates (or net investment rates) in the East Asian economies has been a minor one. Specifically, the increases in savings rates from 10% to over 30%, can only account for around 1 percentage point of growth in the region. The results contrast with a number of growth accounting studies which have attributed the success of the East Asian economies to their high savings rates.
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Bibliographic InfoPaper provided by New South Wales - School of Economics in its series Papers with number 98-14.
Length: 28 pages
Date of creation: 1998
Date of revision:
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Postal: THE UNIVERSITY OF NEW SOUTH WALES, SCHOOL OF ECONOMICS, P.O.B. 1 KENSINGTON, NEW SOUTH WALES 2033 AUSTRALIA.
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SAVINGS ; CONVERGENCE ; INVESTMENTS ; GROWTH MODELS;
Find related papers by JEL classification:
- O00 - Economic Development, Technological Change, and Growth - - General - - - General
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
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