the determinants and long-term projections of saving rates in developing asia
DESCRIPTION
The Determinants and Long-Term Projections of Saving Rates in Developing Asia. Charles Yuji Horioka (Institute of Social and Economic Research, Osaka University, and National Bureau of Economic Research) and Akiko Terada-Hagiwara (Asian Development Bank) - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/1.jpg)
The Determinants and Long-Term Projections of Saving Rates in Developing Asia
Charles Yuji Horioka(Institute of Social and Economic Research, Osaka University, and
National Bureau of Economic Research)and
Akiko Terada-Hagiwara(Asian Development Bank)
Prepared for presentation at the Federation of ASEAN Economic Associations (FAEA) conference, Manila, Philippines, on
November 28, 2012
1
![Page 2: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/2.jpg)
I. INTRODUCTION
2
![Page 3: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/3.jpg)
Introduction (1)
Developing Asia has been characterized by high saving rates almost across the board in recent years, which have made possible high levels of domestic investment but have also led to large capital outflows (current account surpluses) (see, for example, the data presented in Kim and Shin (2009)).
3
![Page 4: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/4.jpg)
Introduction (2)
To put it another way, the developing economies of Asia have oversaved and underinvested, leading to large current account imbalances (surpluses), as asserted by Ben Bernanke and others.
4
![Page 5: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/5.jpg)
Introduction (3)
However, some assert that because population aging will occur at a rapid rate in Asia, there will be a sharp decline in saving rates in Asia. If so, the large current account imbalances (surpluses) that Asia is currently showing will go away by themselves without any need for government intervention. Is this assertion correct???
5
![Page 6: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/6.jpg)
The Purpose of This Presentation(1) To present data on domestic saving rates in
developing Asia during the 1966-2007 period(2) To analyze the determinants of domestic saving
rates in developing Asia during the 1966-2007 period
(3) To project trends in domestic saving rates in developing Asia for the 2011-30 period based on our estimation results
6
![Page 7: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/7.jpg)
The Sample of CountriesThe following 12 Asian countries: People’s Republic of China; Hong Kong, China;
India; Indonesia; Republic of Korea; Malaysia; Pakistan; Philippines; Singapore; Taiwan; Thailand, and Viet Nam
These countries comprise 95% of the GDP of developing Asia.
7
![Page 8: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/8.jpg)
II. DATA ON DOMESTIC SAVING RATES IN DEVELOPING ASIA
8
![Page 9: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/9.jpg)
02
04
06
00
20
40
60
02
04
06
0
70 75 80 85 90 95 00 07 70 75 80 85 90 95 00 07 70 75 80 85 90 95 00 07 70 75 80 85 90 95 00 07
70 75 80 85 90 95 00 07 70 75 80 85 90 95 00 07 70 75 80 85 90 95 00 07 70 75 80 85 90 95 00 07
70 75 80 85 90 95 00 07 70 75 80 85 90 95 00 07 70 75 80 85 90 95 00 07 70758085 90 95 00 07
Hong Kong, China India Indonesia Korea, Rep. of
Malaysia China, People's Rep. of Pakistan Philippines
Singapore Taipei,China Thailand Viet Nam
Nominal measure Real measure
Ave
rag
e D
om
estic
Sav
ing
Rat
e
Graphs by ctry
![Page 10: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/10.jpg)
![Page 11: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/11.jpg)
The Level of Saving Rates
There have been enormous variations in the level of saving rates, even within developing Asia, during the past 50 years, with saving rates tending to be higher in East Asia and Southeast Asia (with the exception of the Indonesia, Philippines, and Vietnam) and lower in South Asia.
11
![Page 12: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/12.jpg)
Trends in Saving Rates (1)
There have been enormous variations in trends over time in saving rates, even within developing Asia, during the past 50 years, with saving rates showing upward trends in Korea, Malaysia, China, Pakistan, Singapore, Taiwan, Thailand, and Vietnam, downward trends in Hong Kong, Indonesia and the Philippines, and no clear trend in India.
12
![Page 13: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/13.jpg)
Trends in Saving Rates (2)
In the 1960s, Indonesia, Korea, Pakistan, and Singapore had among the lowest saving rates (below 10%) with that of Singapore even being negative, but the saving rates of these economies increased sharply in the 1970s except for Pakistan. By the mid-1980s, the domestic saving rates of these economies as well as those in Taipei, China and Malaysia exceeded 30% of GDP.
13
![Page 14: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/14.jpg)
III. THE DETERMINANTS OF DOMESTIC SAVING RATES IN
DEVELOPING ASIA
14
![Page 15: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/15.jpg)
Previous Studies (1)
• There have been many studies that have made use of cross-section or panel cross-country data or of time series data for individual countries to analyze the determinants of national saving starting with Modigliani’s seminal 1970 paper.
15
![Page 16: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/16.jpg)
Previous Studies (2)Higgins, M. (1998), “Demography, National Savings,
and International Capital Flows,” International Economic Review, vol. 39, no. 2, pp. 343-369.
Bosworth, Barry, and Chodorow-Reich, Gabriel (2007), mimeo. (Brookings Institution)
Kim, Soyoung, and Lee, Jong-Wha (2008), Japan and the World Economy)
Park, Donghyun, and Shin, Kwanho (2009), ADB Economics Working Paper Series, no. 158, Asian Development Bank
16
![Page 17: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/17.jpg)
Previous Studies (3)Previous studies examine the impact of such
factors as the age structure of the population, the level and growth rate of income, life expectancy, and the degree of financial sector development on saving rates.
17
![Page 18: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/18.jpg)
18
All Asia All CountriesCountries Minus Asia
GDP Growth + + +Lagged GDP Growth +Per Capita Income - +Per Capita Income Squared +Life Expectancy +Age Dependency Ratio - (- ) -Youth Dependency Ratio -Financial Development
Determinants of Saving (Park and Shin, 2009)
![Page 19: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/19.jpg)
Determinants of Saving (1)
• We analyze the determinants of variations over time and among countries in developing Asia using both random effects and country fixed effects models.
• Following previous studies, the observations are five-year averages except for the most recent period (1966-70, 1971-75, 1976-80, 1981-85, 1986-90, 1991-95, 1996-2000, and 2001-07).
19
![Page 20: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/20.jpg)
Determinants of Saving (2)(Demographic variables)• AGE = Aged dependency ratio (population
aged 65 and older/population aged 15-64)• DEP = Youth dependency ratio (population
aged 0-14/population aged 15-64)
20
![Page 21: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/21.jpg)
Determinants of Saving (3)(GDP-related variables)• LNGDP = The log of real per capita GDP • LNGDPSQ = The square of LNGDP• CHGDP = The growth rate of real per capita
GDP
21
![Page 22: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/22.jpg)
Determinants of Saving (4)(Financial variables)• CREDIT = The ratio of private credit by deposit
money banks and other financial institutions to GDP
• CREDITSQ = The square of CREDIT• RINT = The real interest rate
22
![Page 23: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/23.jpg)
Determinants of Saving (5)(Other economic variables)• FISC = The ratio of the fiscal balance of the
government to GDP• SSR = The social security ratio (the ratio of
expenditures on social services and pensions to gross national disposable income)
• Dropped from the final specification because not significant
23
![Page 24: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/24.jpg)
Descriptive Statistics
24
Variable No. of Obs. Mean Std. Dev. Minimum MaximumSR 78 25.2 14 -3.8 60.2AGE 78 7.8 2.2 5.7 16.3DEP 78 56.8 18.6 20.3 87.6LNGDP 78 8.5 0.9 6.7 10.5CREDIT 78 0.7 0.5 0.1 2.2CHGDP 78 4.6 2.8 -2.7 12.3RINT 70 1.1 3 -7.5 8.7
Appendix Table 2: Descriptive Statistics
Note: Refer to Appendix Table 1 for variable definitions and data sources.
![Page 25: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/25.jpg)
25
0
20
40
60
PW
TS
R
6 8 10 12 14 16AGE
A. Aged dependency ratio
02
04
06
0P
WT
SR
20 40 60 80 100DEP
B. Youth dependency ratio
02
04
06
0P
WT
SR
0 .5 1 1.5 2 2.5CREDIT
C. Private credit %GDP0
20
40
60
PW
TS
R
6 7 8 9 10 11LNGDP
D. Log per capita GDP0
20
40
60
PW
TS
R
-5 0 5 10 15CHGDP
E. Per capita GDP growth
02
04
06
0P
WT
SR
0 5 10 15SSR
F. Social service expenditure
![Page 26: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/26.jpg)
Estimation Results
26
![Page 27: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/27.jpg)
Estimation Results without Lags
27
Model AGE DEP LNGDP LNGDPSQ CREDIT CREDITSQ CHGDP RINT R-squared # obs.
1 -0.95 ** -0.03 -43.13 *** 2.92 *** 14.48 ** -6.46 *** 0.76 780.35 0.13 4.94 0.32 4.92 1.62 0.61
-2.71 -0.23 -8.73 9.24 2.94 -3.99 0.702 -0.98 ** -0.03 -44.21 *** 2.99 *** 14.58 ** -6.41 *** 0.08 0.76 78
0.38 0.13 6.19 0.39 5.01 1.70 0.14 0.62-2.58 -0.22 -7.15 7.75 2.91 -3.78 0.59 0.71
3 -0.83 ** 0.05 -35.63 ** 2.53 *** 14.88 *** -6.25 *** 0.16 0.03 0.69 700.36 0.18 13.38 0.74 4.80 1.56 0.14 0.16 0.65
-2.28 0.27 -2.66 3.40 3.10 -4.00 1.15 0.19 0.72
4 -1.58 *** -0.08 -46.79 *** 3.15 *** 15.35 *** -6.71 *** 0.75 780.52 0.10 8.16 0.50 5.87 1.82 0.68
-3.03 -0.72 -5.73 6.29 2.61 -3.69 0.745 -1.63 *** -0.07 -49.45 *** 3.31 *** 15.08 ** -6.39 *** 0.24 * 0.75 78
0.54 0.10 8.97 0.55 5.92 1.83 0.13 0.70-3.02 -0.69 -5.51 5.99 2.55 -3.49 1.75 0.75
6 -1.69 ** -0.62 -40.65 ** 2.85 *** 14.63 ** -6.15 *** 0.31 ** -0.04 0.66 700.66 0.15 16.77 1.01 6.23 1.84 0.15 0.19 0.75
-2.55 -0.41 -2.42 2.81 2.35 -3.35 2.09 -0.21 0.78(continued)
Table 1: The Determinants of the Real Domestic Saving Rate in Developing Asia
Country fixed effects model with no lags
Random effects model with no lags
![Page 28: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/28.jpg)
Estimation Results with Lags
28
Table 1 (continued)Model AGE DEP LNGDP LNGDPSQ CREDIT CREDITSQ CHGDP RINT R-squared # obs.
7 -1.34 *** -0.02 -24.63 ** 1.96 *** 6.70 -3.51 0.60 660.40 0.20 8.40 0.47 6.22 2.13 0.59
-3.33 -0.09 -2.93 4.17 1.08 -1.65 0.668 -1.41 *** -0.02 -25.64 ** 2.03 *** 6.75 -3.32 0.19 0.60 66
0.46 0.20 8.86 0.52 6.45 2.24 0.15 0.62-3.10 -0.09 -2.89 3.90 1.05 -1.48 1.28 0.68
9 -1.42 ** 0.09 -14.12 1.43 7.12 -2.98 0.26 * -0.07 0.55 620.51 0.23 16.90 0.86 5.70 1.95 0.14 0.26 0.57
-2.77 0.37 -0.84 1.66 1.25 -1.52 1.84 -0.27 0.64
10 -1.91 *** -0.14 -32.31 *** 2.39 *** 7.61 -4.09 0.58 660.61 0.13 10.43 0.73 7.40 2.52 0.70
-3.12 -1.08 -3.10 3.29 1.03 -1.62 0.7311 -2.02 *** -0.14 -34.12 *** 2.51 *** 7.18 -3.51 0.40 ** 0.58 66
0.68 0.14 12.04 0.83 7.63 2.56 0.18 0.74-2.99 -0.98 -2.83 3.03 0.94 -1.37 2.17 0.76
12 -1.93 *** -0.10 -23.92 1.97 * 5.02 -2.70 0.37 ** -0.17 0.52 620.72 0.16 18.59 1.16 7.37 2.40 0.17 0.24 0.73
-2.68 -0.61 -1.29 1.69 0.68 -1.13 2.22 -0.71 0.76
*Significant at the 10% level. **Significant at the 5% level. ***Significant at the 1% level.
Notes: The figures are the estimated coefficients (first row), robust standard errors (second row), and t-values (third row). The first R-squared iswithin, the second is between, and the third is overall. The constant terms and country fixed effects are not shown to save space.
Country fixed effects model with lags of LNGDP, LNGDPSQ, CREDIT, CREDITSQ, and CHGDP
Random effects model with lags of LNGDP, LNGDPSQ, CREDIT, CREDITSQ, and CHGDP
![Page 29: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/29.jpg)
Estimation Results (1)(Demographic variables)• AGE = Aged dependency ratio (negative, as
expected, and significant)• DEP = Youth dependency ratio (totally
insignificant)
29
![Page 30: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/30.jpg)
Estimation Results (2)(GDP-related variables)• LNGDP = The log of real per capita GDP
(negative and significant, as expected)• LNGDPSQ = The square of LNGDP (positive
and significant)• CHGDP = The growth rate of real per capita
GDP (positive and significant about half the time)
30
![Page 31: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/31.jpg)
Estimation Results (3)(GDP-related variables) (cont’d) Thus, LNGDP has a nonlinear (convex) impact on the
domestic saving rate, with its impact being negative at low levels of LNGDP and positive at high levels of LNGDP. Our results imply that, by 1976-80, income levels had become high enough for LNGDP to have a positive impact on the domestic saving rate in nine out of the twelve economies in our sample (with the only exceptions being India, China, and Viet Nam).
31
![Page 32: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/32.jpg)
Estimation Results (4)(Financial variables)• CREDIT = The ratio of private credit to GDP
(positive and significant without lags)• CREDITSQ = The square of CREDIT (negative and
significant without lags)• RINT = The real interest rate (never significant)
32
![Page 33: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/33.jpg)
Estimation Results (5)(Financial variables) (cont’d)Thus, CREDIT has a nonlinear (concave) impact on the
domestic saving rate, with its impact being positive at low levels of CREDIT and negative at high levels of CREDIT. Our results imply that financial sector development has progressed enough in six of the twelve economies in our sample (China; Hong Kong, China; Republic of Korea; Malaysia; Singapore; and Taiwan) for the availability of private credit to have a negative impact on the domestic saving rate in these economies.
33
![Page 34: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/34.jpg)
Estimation Results (Summary)Domestic saving rates in developing Asia are determined
primarily by the age structure of the population (especially the aged dependency ratio), the level of per capita GDP, and the degree of financial sector development, with the latter two having a non-linear impact thereon (convex and concave, respectively).
34
![Page 35: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/35.jpg)
IV. FUTURE TRENDS IN DOMESTIC SAVING RATES IN DEVELOPING
ASIA
35
![Page 36: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/36.jpg)
Projections of Future Trends (1) • We project future trends in domestic saving rates for
2011-20 and 2021-30 using:• Our estimation results based on our country fixed
effects model • U.N. projections of future population by age• Asian Development Bank projections of future per
capita GDP• Our own projections of future trends in financial
sector development based on ADB projections in future per capita GDP in conjunction with data on financial sector development broken down by per capita GDP.
36
![Page 37: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/37.jpg)
Projections of Future Trends (2) • The United Nations projects that there will be
enormous variations in future demographic trends among the countries of developing Asia, with the demographic bonus ending as early as 2010 in some countries or territories such as Hong Kong, Singapore, and Thailand and as late as 2035-40 in some countries such as India and the Philippines.
• Not surprisingly, we also find enormous variations in future trends in domestic saving rates in developing Asia.
37
![Page 38: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/38.jpg)
Future Trends in Saving Rates
38
2001-07 2011-20 2021-30
Fitted Projected Projected
PRC 31.82 30.30 31.88
Hong Kong, China 29.75 24.33 20.02
Indonesia 24.08 21.59 20.80
India 14.54 14.92 15.91
Korea, Rep. of 42.02 35.53 37.36
Malaysia 44.65 43.74 41.97
Pakistan 6.66 7.01 10.05
Philippines 14.90 12.91 11.81
Singapore 58.74 47.02 40.43
Thailand 31.31 28.59 23.53
Taipei,China 25.10 20.68 15.65
Viet Nam 16.76 19.19 15.44
Developing Asia 27.38 26.33 27.21
Table 2: Future Trends in Real Domestic Saving Rates in Developing Asia
Notes: Authors' calculation. Refer to the main text for explanation.
Economy
![Page 39: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/39.jpg)
Future Demographic Trends
39
Economy
The Period during which the PopulationAged 65 and Older Reaches 14 Percent
the Total Population
PRC 2020-25
Hong Kong, China 2010-15
Indonesia 2040-45
India 2050-55
Korea, Rep. of 2015-20
Malaysia 2040-45
Pakistan After 2055
Philippines 2050-55
Singapore 2015-20
Thailand 2020-25
Taipei,China 2015-20
Viet Nam 2030-35
J apan 1990-95
Table 3: Population Aging in Developing Asia
Data Source: The United Nations’ (U.N.) projections available athttp://esa.un.org/unpp, and the Statistical Yearbook for Taipei, China,available at http://www.cepd.gov.tw/encontent/m1.aspx?sNo=0000063.
![Page 40: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/40.jpg)
Future Trends in Individual Countries
• Downward trend Hong Kong, Indonesia, Korea, Malaysia,
Philippines, Singapore, Taiwan, and Thailand• Roughly constant China and Vietnam• Upward trend India and Pakistan
40
![Page 41: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/41.jpg)
Future Trends in Developing Asia as a Whole
• The domestic saving rate of developing Asia as a whole is projected to remain roughly constant for the next two decades, averaging 26.3% during the 2011-2020 period and 27.2% during the 2021-2030 period, compared to an actual value of 29.4% and a fitted value of 27.4% during the 2001-2007 period.
41
![Page 42: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/42.jpg)
V. SUMMARY AND CONCLUSIONS
42
![Page 43: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/43.jpg)
Summary (1)• Domestic saving rates in developing Asia have
been high and rising but there has been considerable variation from country to country.
• Domestic saving rates in developing Asia are determined primarily by the age structure of the population, the level of per capita GDP, and the degree of financial sector development, with the latter two having a non-linear impact thereon.
43
![Page 44: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/44.jpg)
Summary (2)• Domestic saving rates will decrease in the
rapidly aging countries of developing Asia over the next two decades because the negative impact of population aging will offset the positive impact of rising income levels.
• Domestic saving rates will increase in the less rapidly aging countries of developing Asia because the negative impact of population aging will be offset by the positive impact of rising income levels.
44
![Page 45: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/45.jpg)
Summary (3)• Domestic saving rates in developing Asia as a
whole will remain roughly constant over the next two decades.
• Shioji and Vu (2011) project that investment rates in developing Asia will show a moderate decline in the next two decades.
45
![Page 46: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/46.jpg)
Summary (4)• This implies that current account surpluses in
developing Asia may increase even further in the next two decades, exacerbating global imbalances even further.
• Government policies that discourage saving (stimulate consumption) and stimulate investment would help to reduce current account surpluses in developing Asia and thence global imbalances.
46
![Page 47: The Determinants and Long-Term Projections of Saving Rates in Developing Asia](https://reader036.vdocument.in/reader036/viewer/2022062322/5681500d550346895dbdebd6/html5/thumbnails/47.jpg)
Thank you very much for your kind attention.
47