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The drivers of investment and savings rates: An exploratory note

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  • Kunal Sen

Abstract

This note explores the literature on the determinants of foreign direct investment and domestic savings. With respect to foreign direct investment, it argues that institutional quality is the key driver of the type of investment that is necessary for structural transformation. With respect to domestic savings, focusing on sub- Saharan Africa, which lags behind other regions in savings rates, it suggests that there needs to be a stronger emphasis on long-term capital needs of the region. Policymakers can support the growth of pension and capital markets and the fintech sector through appropriate reforms and through re-orienting sovereign wealth funds towards more developmental purposes.

Suggested Citation

  • Kunal Sen, . "The drivers of investment and savings rates: An exploratory note," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    • Handle: RePEc:unc:tncjou:114
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    File URL: https://unctad.org/system/files/official-document/diaeia2023d3a5_en.pdf?repec
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    References listed on IDEAS

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    1. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 407-443.
    2. Owen Nyang'oro & Githinji Njenga, 2022. "Pension funds in sub-Saharan Africa," WIDER Working Paper Series wp-2022-95, World Institute for Development Economic Research (UNU-WIDER).
    3. Feldstein, Martin & Horioka, Charles, 1980. "Domestic Saving and International Capital Flows," Economic Journal, Royal Economic Society, vol. 90(358), pages 314-329, June.
    4. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(2), pages 190-207.
    5. Prema-chandra Athukorala & Wanissa Suanin, 2022. "Savings transition in Asia: Unity in diversity," WIDER Working Paper Series wp-2022-172, World Institute for Development Economic Research (UNU-WIDER).
    6. Tony Addison & Amir Lebdioui, 2022. "Public savings in Africa: Do sovereign wealth funds serve development?," WIDER Working Paper Series wp-2022-159, World Institute for Development Economic Research (UNU-WIDER).
    7. Njuguna Ndung'u, 2022. "Fintech in sub-Saharan Africa," WIDER Working Paper Series wp-2022-101, World Institute for Development Economic Research (UNU-WIDER).
    8. Bevan, Alan A. & Estrin, Saul, 2004. "The determinants of foreign direct investment into European transition economies," Journal of Comparative Economics, Elsevier, vol. 32(4), pages 775-787, December.
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    Cited by:

    1. Abrams M.E. Tagem & Desiree Sama-Lang, 2024. "The determinants of domestic savings in Cameroon: what role for institutions?," WIDER Working Paper Series wp-2024-42, World Institute for Development Economic Research (UNU-WIDER).

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