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The Relationship Between Domestic Savings And Economic Growth In Developing Countries: An Econometric Application

Author

Listed:
  • Ali Altıner

    (RECEP TAYYIP ERDOGAN UNIVERSITY)

  • Yeliz Şimşek Korkmaz

    (RECEP TAYYIP ERDOGAN UNIVERSITY)

Abstract

In this study, it is aimed to investigate the interaction between domestic savings and economic growth in 41 developing countries. In this context, panel data analysis was performed using annual data for the period of 1992-2021. In the pre-tests performed in the empirical analysis part, it was determined that there was a cross-sectional dependence between the variables and that the variables had a stationary structure at the level values. Based on this information, fixed effects model was used within the scope of static panel data analysis to estimate the coefficient. According to the estimation results, it has been determined that domestic savings have a positive and significant effect on economic growth. In addition, it was observed that the increase in inflation and foreign direct investment, which were included in the analysis as control variables, had negative and positive effects on economic growth, respectively. Finally, with the causality test applied, it was determined that there is a bidirectional causality relationship between domestic savings and economic growth. These results showed that it is important to implement policies that increase domestic savings in order to achieve sustainable economic growth targets in the countries studied.

Suggested Citation

  • Ali Altıner & Yeliz Şimşek Korkmaz, 2023. "The Relationship Between Domestic Savings And Economic Growth In Developing Countries: An Econometric Application," Ekonomi Maliye Isletme Dergisi, Adil AKINCI, vol. 6(1), pages 22-34, July.
    • Handle: RePEc:gnx:emid43:2023-6-1-1190507
    DOI: 10.46737/emid.1190507
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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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