Saving, Investment, and Current Account Surplus in Developing Asia
AbstractAn integral part of global current account imbalances is the large and persistent current account surplus developing Asia has run since the 1997–1998 Asian crisis. A country’s current account surplus is, by definition, equal to its net saving. The central objective of this paper is to investigate the extent to which the saving and investment rate of Asian countries can be explained by the underlying fundamental determinants of saving and investment such as gross domestic product growth and demographic factors. Our empirical analysis yields two key findings. First, we find stronger evidence of oversaving than underinvestment in the region. Second, we find stronger evidence of overinvestment prior to the Asian crisis than underinvestment after the Asian crisis. This suggests that the key to rebalancing Asian growth toward domestic sources lies in promoting consumption rather than investment.
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Bibliographic InfoPaper provided by Asian Development Bank in its series ADB Economics Working Paper Series with number 158.
Length: 35 pages
Date of creation: Apr 2009
Date of revision:
Saving; investment; current account balance; global imbalance; Asia;
Find related papers by JEL classification:
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-04-17 (All new papers)
- NEP-DEV-2010-04-17 (Development)
- NEP-MAC-2010-04-17 (Macroeconomics)
- NEP-OPM-2010-04-17 (Open Economy Macroeconomics)
- NEP-SEA-2010-04-17 (South East Asia)
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