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Saving and growth in Egypt

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  • Hevia, Constantino
  • Loayza, Norman

Abstract

This study illustrates the mechanisms linking national saving and economic growth, with the purpose of understanding the possibilities and limits of a saving-based growth agenda in the context of the Egyptian economy. This is done through a simple theoretical model, calibrated to fit the Egyptian economy, and simulated to explore different potential scenarios. The main conclusion is that if the Egyptian economy does not experience progress in productivity -- stemming from technological innovation, improved public management, and private-sector reforms -- then a high rate of economic growth is not feasible at current rates of national saving and would require a saving effort that is highly unrealistic. For instance, financing a constant 4 percent growth rate of gross domestic product per capita with no improvement in total factor productivity would require a national saving rate of around 50 percent in the first decade and 80 percent in 25 years. However, if productivity rises, sustaining and improving high rates of economic growth becomes viable. Following the previous example, a 2 percent growth rate of total factor productivity would allow a 4 percent growth rate of gross domestic product per capita with national saving rate in the realistic range of 20-25 percent of gross domestic product.

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  • Hevia, Constantino & Loayza, Norman, 2011. "Saving and growth in Egypt," Policy Research Working Paper Series 5529, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5529
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    References listed on IDEAS

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    1. Dani Rodrik & Arvind Subramanian, 2009. "Why Did Financial Globalization Disappoint?," IMF Staff Papers, Palgrave Macmillan, vol. 56(1), pages 112-138, April.
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    5. Orazio P. Attanasio & Lucio Picci & Antonello E. Scorcu, 2000. "Saving, Growth, and Investment: A Macroeconomic Analysis Using a Panel of Countries," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 182-211, May.
    6. Herrera, Santiago & Youssef, Hoda & Youssef, Hoda & Zaki, Chahir, 2010. "Egypt beyond the crisis : medium-term challenges for sustained growth," Policy Research Working Paper Series 5451, The World Bank.
    7. Loayza,Norman V. & Odawara,Rei, 2010. "Infrastructure and economic growth in Egypt," Policy Research Working Paper Series 5177, The World Bank.
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    Cited by:

    1. World Bank, 2014. "Strengthening Recovery in Central and Eastern Europe : EU11 Regular Economic Report," World Bank Other Operational Studies 20072, The World Bank.
    2. World Bank, 2014. "EU11 Regular Economic Report, Issue #29, July 2014 : Strengthening Recovery in Central and Eastern Europe," World Bank Other Operational Studies 21040, The World Bank.
    3. Tsermenidis, Konstantinos, 2014. "Προσδιοριστικοί Παράγοντες Της Εθνικής Αποταμίευσης Κατά Την Περίοδο 1990-2010 Και Μέτρα Ενίσχυσης Της Οικονομικής Ανάπτυξης [The Determinants of National Savings in Greece during the period 1990-2," MPRA Paper 56773, University Library of Munich, Germany.
    4. Hevia, Constantino & Loayza, Norman, 2013. "Saving and growth in Sri Lanka," Policy Research Working Paper Series 6300, The World Bank.
    5. Shima'a Hanafy, 2015. "Determinants of FDI Location in Egypt—Empirical Analysis Using Governorate Panel Data," MAGKS Papers on Economics 201513, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    6. Shima’a Hanafy & Marcus Marktanner, 2019. "Sectoral FDI, absorptive capacity and economic growth – empirical evidence from Egyptian governorates," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 28(1), pages 57-81, January.
    7. Wesseh, Presley K. & Lin, Boqiang, 2018. "Energy consumption, fuel substitution, technical change, and economic growth: Implications for CO2 mitigation in Egypt," Energy Policy, Elsevier, vol. 117(C), pages 340-347.
    8. Damir Cosic & Sudyumna Dahal & Markus Kitzmuller, 2017. "Climbing Higher," World Bank Other Operational Studies 27283, The World Bank.

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    Keywords

    Economic Growth; Access to Finance; Economic Theory&Research; Emerging Markets; Achieving Shared Growth;
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