© 2000 International Bank for Reconstruction and Development / The World Bank
research-article |
Saving Transitions
professor at the John F. Kennedy School of Government at Harvard University dani_rodrik{at}harvard.edu
This article takes a systematic cross-national approach to identifying saving transitions— defined as sustained increases in the saving rate of 5 percentage points or more—to study their determinants and to reexamine the question of causality between growth and saving. Countries that undergo saving transitions do not necessarily experience sustained increases in their growth rates. In fact, growth rates typically return to their levels before the transition within a decade. By contrast, countries that undergo growth transitions—arising from improved terms of trade, increased domestic investment, or other sources—do end up with permanently higher saving rates. Hence saving transitions do not appear to be causal with respect to superior economic performance.