Empirical Analysis of the Nexus between Saving and Economic Growth in Selected African Countries (1981–2014)

Bolarinwa, S.T ; Obembe, O B. (2017)

Journal of Development policy and practice, VOL. 2,NO. 1,P. 110–129

Journal

This empirical study investigates the direction of causality between gross domestic saving and economic growth among the six sub-Saharan African fastest growing economies as reported by African Development Bank between 1981 and 2014 using the recently developed methodologies of autoregressive distributed lag (ARDL) and the Toda and Yamamoto causality test. The result shows the existence of unidirectional causality running from economic growth to gross domestic saving for Ghana and Burkina Faso, while gross domestic saving Granger causes economic growth in Liberia, Niger and Sierra Leone, indicating a unidirectional causality. However, no causality is recorded for Nigeria. The empirical study, therefore, concludes that the direction of causality is mixed and country-specific among the sub-Saharan African fastest growing economies.