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Comparing Savings Behavior in Asia and Latin America: The Role of Capital Inflows and Economic Growth

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  • Marwan Abdul-Malik Thanoon
  • Ahmad Zubaidi Baharumshah

    (University of Mosul, Iraq
    University Putra Malaysia, Malaysia)

Abstract

This paper investigates the determinants of savings in Asia and compares them with those of the economies in Latin America. The evidence based reveals that countries in the two regions share some common features with respect to their savings rates that are largely affected by (1) international capital inflows, which, in general, displace domestic savings in less than one-to-one fashion; (2) dependency ratios, hence supporting life-cycle hypothesis; and (3) the size of the export sector which can contribute positively to national savings. Despite these similarities, a number of important differences can be identified across country groups. First, economic growth affects national savings positively (negatively) in Asia (Latin America). Second, the long-term negative impact of capital flows on domestic savings appears to be considerably weaker in the Asian countries compared to the Latin American countries. Together, the two factors explain why savings ratios may differ markedly between the two regions.

Suggested Citation

  • Marwan Abdul-Malik Thanoon & Ahmad Zubaidi Baharumshah, 2012. "Comparing Savings Behavior in Asia and Latin America: The Role of Capital Inflows and Economic Growth," Journal of Developing Areas, Tennessee State University, College of Business, vol. 46(1), pages 113-131, January-J.
    • Handle: RePEc:jda:journl:vol.46:year:2012:issue1:pp:113-131
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    References listed on IDEAS

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    More about this item

    Keywords

    National Savings; Life-cycle Hypothesis; Foreign Capital;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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