Can Africa's Saving Collapse Be Reversed?
Private saving in Sub-Saharan Africa declined from more than 11 percent of disposable income in the 1970s to less than 8 percent in the 1980s and only partially recovered (to less than 9 percent) in the 1990s. This article analyzes the determinants of private saving in Sub-Saharan Africa, seeking to explain the region's dismal performance and identify policies that could help to reverse the region's decline in saving. The analysis shows that in Sub-Saharan Africa causality runs from growth to investment (and perhaps to private saving), whereas a rise in the saving rate Granger-causes an increase in investment. Foreign aid Granger-causes a reduction in both saving and investment, and investment also Granger-causes an increase in foreign aid. The empirical analysis of private saving in Sub-Saharan Africa and other regions over 1970–95 suggests that private saving in Africa can be explained by standard behavioral models. According to these models private saving in Africa lags behind that in other regions (most notably, the high performing Asian economies) because of the region's lower per capita income, high young-age dependency ratio, and high dependence on aid. The combined effects of these factors substantially outweigh Africa's advantage from its lower public saving and higher government consumption. Finally, analysis of the experiences of Kenya, Zimbabwe, and Botswana provides further insight into the saving process in Sub-Saharan Africa. Copyright The Author 2000. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / the world bank . All rights reserved. For permissions, please e-mail: firstname.lastname@example.org, Oxford University Press.
Volume (Year): 14 (2000)
Issue (Month): 3 (September)
|Contact details of provider:|| Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK|
Phone: (202) 477-1234
Fax: 01865 267 985
Web page: http://wber.oxfordjournals.org/
More information through EDIRC
|Order Information:||Web: http://www.oup.co.uk/journals|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Martin Feldstein & Charles Horioka, 1979.
"Domestic Savings and International Capital Flows,"
NBER Working Papers
0310, National Bureau of Economic Research, Inc.
- Jappelli, Tullio & Pagano, Marco, 1992.
"Saving, Growth and Liquidity Constraints,"
CEPR Discussion Papers
662, C.E.P.R. Discussion Papers.
- repec:pal:imfstp:v:39:y:1992:i:3:p:495-517 is not listed on IDEAS
- Gordon, Roger H & Bovenberg, A Lans, 1996.
"Why Is Capital So Immobile Internationally? Possible Explanations and Implications for Capital Income Taxation,"
American Economic Review,
American Economic Association, vol. 86(5), pages 1057-75, December.
- Gordon, R.H. & Bovenberg, A.L., 1994. "Why is capital so immobile internationally? : Possible explanations and implications for capital income taxation," Discussion Paper 1994-63, Tilburg University, Center for Economic Research.
- Gordon, R.H. & Bovenberg, A.L., 1994. "Why Is Capital So Immobile Internationally?: Possible Explanations and Implications for Capital Income Taxation," Working Papers 358, Research Seminar in International Economics, University of Michigan.
- Roger H. Gordon & A. Lans Bovenberg, 1994. "Why is Capital so Immobile Internationally?: Possible Explanations and Implications for Capital Income Taxation," NBER Working Papers 4796, National Bureau of Economic Research, Inc.
- Raut, Lakshmi & Virmani, Arvind, 1989. "Determinants of Consumption and Savings Behavior in Developing Countries," World Bank Economic Review, World Bank Group, vol. 3(3), pages 379-93, September.
- Christopher D. Carroll & David N. Weil, 1993.
"Saving and Growth: A Reinterpretation,"
NBER Working Papers
4470, National Bureau of Economic Research, Inc.
- Carroll, Christopher D. & Weil, David N., 1994. "Saving and growth: a reinterpretation," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 40(1), pages 133-192, June.
- Boskin, Michael J, 1978. "Taxation, Saving, and the Rate of Interest," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages S3-27, April.
- Fry, Maxwell J, 1978. "Money and Capital or Financial Deepening in Economic Development?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 10(4), pages 464-75, November.
- Martin Feldstein & Philippe Bacchetta, 1991.
"National Saving and International Investment,"
in: National Saving and Economic Performance, pages 201-226
National Bureau of Economic Research, Inc.
- Fershtman, C. & Weiss, Y., 1991.
"Social Status , Culture and Economic Performance,"
32-91, Tel Aviv.
- Easterly, William & Rebelo, Sergio, 1993.
"Fiscal policy and economic growth: An empirical investigation,"
Journal of Monetary Economics,
Elsevier, vol. 32(3), pages 417-458, December.
- William Easterly & Sergio Rebelo, 1993. "Fiscal Policy and Economic Growth: An Empirical Investigation," NBER Working Papers 4499, National Bureau of Economic Research, Inc.
- Easterly, William & Rebelo, Sérgio, 1994. "Fiscal Policy and Economic Growth: An Empirical Investigation," CEPR Discussion Papers 885, C.E.P.R. Discussion Papers.
- Alwyn Young, 1994. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," NBER Working Papers 4680, National Bureau of Economic Research, Inc.
- Manuel Arellano & Stephen Bond, 1991.
"Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations,"
Review of Economic Studies,
Oxford University Press, vol. 58(2), pages 277-297.
- Tom Doan, . "RATS program to replicate Arellano-Bond 1991 dynamic panel," Statistical Software Components RTZ00169, Boston College Department of Economics.
- Christopher D. Carroll & David N. Weil, 1993. "Saving and growth: a reinterpretation," Working Paper Series / Economic Activity Section 140, Board of Governors of the Federal Reserve System (U.S.).
- De Long, J. Bradford & Summers, Lawrence H., 1993. "How strongly do developing economies benefit from equipment investment?," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 395-415, December.
- Michael J. Boskin, 1978. "Taxation, Saving, and the Rate of Interest," NBER Chapters, in: Research in Taxation, pages 3-27 National Bureau of Economic Research, Inc.
- Cole, Harold L & Mailath, George J & Postlewaite, Andrew, 1992. "Social Norms, Savings Behavior, and Growth," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1092-1125, December.
- repec:pal:imfstp:v:43:y:1996:i:1:p:38-71 is not listed on IDEAS
- repec:fth:michin:358 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:oup:wbecrv:v:14:y:2000:i:3:p:415-443. 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: (Oxford University Press)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.