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Diminshed Returns? The Role of Savings and Investment Rates in East Asia's Miracle

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  • Robertson, P.E.

Abstract

The causes of growth in East Asia remain controversial despite substantial empirical research. In this paper I adopt the neoclassical growth model as the maintained hypothesis, and decompose growth into the exogenous variables of the neoclassical model. It is shown that the role of increased savings rates (or net investment rates) in the East Asian economies has been a minor one. Specifically, the increases in savings rates from 10% to over 30%, can only account for around 1 percentage point of growth in the region. The results contrast with a number of growth accounting studies which have attributed the success of the East Asian economies to their high savings rates.

Suggested Citation

  • Robertson, P.E., 1998. "Diminshed Returns? The Role of Savings and Investment Rates in East Asia's Miracle," Papers 98-14, New South Wales - School of Economics.
  • Handle: RePEc:fth:nesowa:98-14
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    References listed on IDEAS

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    More about this item

    Keywords

    SAVINGS ; CONVERGENCE ; INVESTMENTS ; GROWTH MODELS;

    JEL classification:

    • O00 - Economic Development, Innovation, Technological Change, and Growth - - General - - - General
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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