IDEAS home Printed from https://ideas.repec.org/a/eaa/aeinde/v13y2013i2_14.html
   My bibliography  Save this article

National Savings And Foreign Capital In Pakistan

Author

Listed:
  • AFZAL, Muhammad

Abstract

This paper has addressed the nature of the casual relationship between national savings and foreign capital in Pakistan over the period 1960 -2010 using the Granger no-causality test based on Toda and Yamamoto (1995) procedure. The results show that no causality is found from foreign capital to savings but savings causes foreign capital when we consider the whole period (1960-2010). But for 1973-90 periods, both caused each other. No causality is found between foreign capital and savings but savings Granger-cause foreign capital in 1990-2010 periods. Income and savings Granger cause each other for all periods. The investment-savings relationship is mixed. Foreign capital is not a permanently dependable source. Pakistan has to rely on its own savings though the need for foreign capital will continue to haunt. An adequate reduction in non-development expenditure would release resources for productive investment that would raise production and employment and would result in the virtuous circle of saving-investment-growth-savings.

Suggested Citation

  • AFZAL, Muhammad, 2013. "National Savings And Foreign Capital In Pakistan," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 13(2), pages 197-206.
  • Handle: RePEc:eaa:aeinde:v:13:y:2013:i:2_14
    as

    Download full text from publisher

    File URL: http://www.usc.es/economet/journals1/aeid/aeid13214.pdf
    Download Restriction: Access restricted to subscribers. Free on line subscription for universities from low income countries. More information at http://www.usc.es/economet/info.htm

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, October.
    2. Aizenman, Joshua & Pinto, Brian & Radziwill, Artur, 2007. "Sources for financing domestic capital - Is foreign saving a viable option for developing countries?," Journal of International Money and Finance, Elsevier, vol. 26(5), pages 682-702, September.
    3. Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992. "Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?," Journal of Econometrics, Elsevier, vol. 54(1-3), pages 159-178.
    4. Griffin, Keith B & Enos, J L, 1970. "Foreign Assistance: Objectives and Consequences," Economic Development and Cultural Change, University of Chicago Press, vol. 18(3), pages 313-327, April.
    5. Papanek, Gustav F, 1973. "Aid, Foreign Private Investment, Savings, and Growth in Less Developed Countries," Journal of Political Economy, University of Chicago Press, vol. 81(1), pages 120-130, Jan.-Feb..
    6. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
    7. Papanek, Gustav F, 1972. "The Effect of Aid and other Resource Transfers on Savings and Growth in Less Developed Countries," Economic Journal, Royal Economic Society, vol. 82(327), pages 934-950, September.
    8. A. R. Kemal, 1992. "Self-Reliance and the Implications for Growth and Resource Mobilisation," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 31(4), pages 1101-1110.
    9. Mosley, Paul, 1980. "Aid, Savings and Growth Revisited," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 42(2), pages 79-95, May.
    10. Zapata, Hector O & Rambaldi, Alicia N, 1997. "Monte Carlo Evidence on Cointegration and Causation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 59(2), pages 285-298, May.
    11. Reinhart, Carmen M. & Talvi, Ernesto, 1998. "Capital flows and saving in Latin America and Asia: a reinterpretation," Journal of Development Economics, Elsevier, vol. 57(1), pages 45-66, October.
    12. Naheed Z. Khan & Eric Rahim, 1993. "Foreign Aid, Domestic Savings and Economic Growth (Pakistan: 1960 to 1988)," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 32(4), pages 1157-1167.
    13. Mohammad Afzal, 2004. "Estimating saving and investment functions in Pakistan," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 41(1), pages 67-78, June.
    14. Gupta, Kanhaya L, 1975. "Foreign Capital Inflows, Dependency Burden, and Saving Rates in Developing Countries: A Simultaneous Equation Model," Kyklos, Wiley Blackwell, vol. 28(2), pages 358-374.
    15. Over, A Mead, Jr, 1975. " An Example of the Simultaneous-Equation Problem: A Note on "Foreign Assistance: Objectives and Consequences."," Economic Development and Cultural Change, University of Chicago Press, vol. 23(4), pages 751-756, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Savings; Foreign capital; Granger no-causality; Pakistan.;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F30 - International Economics - - International Finance - - - General
    • F35 - International Economics - - International Finance - - - Foreign Aid

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eaa:aeinde:v:13:y:2013:i:2_14. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (M. Carmen Guisan). General contact details of provider: http://www.usc.es/economet/eaa.htm .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.