Determinants of Gross Domestic Saving: An Empirical Evidence From east Africa
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Date
2016-06
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Addis Ababa University
Abstract
The objective of this paper was to investigate the determinants of gross domestic saving in the Ethiopia, Kenya, Mozambique, Rwanda, Tanzania, and Uganda using annual panel datasets form 1991-2012.In this study, effort has been made to identify the fundamental determinants of domestic saving in the region of East Africa using the Fixed Effects (FE) model. Estimated results revealed that GDP per capita growth (gdpp) and degree of urbanization (urb) are the only significant determinants of gross domestic saving in the region. However, inflation rate, working age group as a percentage of total population (py), age dependency ratio to working age (agedp), money and quasi money as a percentage of GDP (m2), and government expenditure as a percentage of GDP (ggov) are found to be not statistically significant at the conventional levels. It seems fairly imperative to suggest that governments should give amplified concern for GDP per capita growth and degree of urbanization more than other candidates if they are in a position to design policies for the sake of boosting up domestic savings. On the other hand, this in turn, may be boosting up sustainable economic growth through encouraging investment over the region of interest.
Key Words: Lifecycle/Permanent-income theory; gross domestic saving; panel data, fixed effects; East Africa
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Keywords
Lifecycle/Permanent-income theory, gross domestic saving, fixed effects, ;East Africa