IDEAS home Printed from
   My bibliography  Save this article

What do Savings-Investment Correlations tell us about the International Capital Mobility of Less Developed Countries?


  • Holmes, Mark J.

    () (Waikato University Management School)


This paper investigates the extent of capital mobility with respect to less developed countries over the study period 1979-2001. For this purpose, the Feldstein-Horioka equation linking domestic savings and investment is estimated. However, there is a novel empirical approach in this study based on the employment of panel data methods of cointegration testing and estimation of the long-run saving retention coefficient. There is strong evidence of cointegration between domestic savings and investment. Panel estimation based on fully modified ordinary least squares indicates that capital is imperfectly mobile with a long-run saving retention coefficient of about one-third. This low value suggests that capital mobility, though imperfect, is nonetheless quite high. Further estimation based on sub-groups comprising Asian and Latin American countries points towards a similar degrees of capital mobility.

Suggested Citation

  • Holmes, Mark J., 2005. "What do Savings-Investment Correlations tell us about the International Capital Mobility of Less Developed Countries?," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 20, pages 590-603.
  • Handle: RePEc:ris:integr:0331

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Jeffrey A. Frankel, 2010. "Monetary Policy in Emerging Markets: A Survey," NBER Working Papers 16125, National Bureau of Economic Research, Inc.

    More about this item


    LDCs; Capital mobility; Savings; Investment; Panel data; Cointegration;

    JEL classification:

    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • F30 - International Economics - - International Finance - - - General
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General


    Access and download statistics


    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:ris:integr:0331. 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: (Jong-Eun Lee). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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.