Understanding the nexus between savings and economic growth: A South African context. Issue 5 (3rd September 2021)

• Record Type: Journal Article
• Authors: van Wyk, Bianca Flavia; Kapingura, Forget Mingiri
• Is Part Of: Development Southern Africa. Volume 38:Issue 5(2021)
• Page Start: 828
• Page End: 844
• Publication Date: 2021-09-03
• Subjects: Economic growth -- savings -- Vector Error Correction -- South Africa; Economic development -- Africa, Southern -- Periodicals; Africa, Southern -- Economic conditions -- Periodicals; 338.90096805
• DOI: 10.1080/0376835X.2021.1932424
• Languages: English
• ISSNs: 0376-835X

Abstract

ABSTRACT: The study examines the relationship between savings and economic growth in South Africa for the period 1986–2018. The Johansen cointegration technique and the Vector Error Correction Model were employed as methods of analysis. The findings from the study indicate that the effect of savings on economic growth in South Africa is negative . However, a positive relationship between the two variables was established in the short-run. Granger causality tests were also utilised to determine the direction of causality between savings and economic growth. The results revealed that the relationship runs from economic growth to gross domestic savings. Another important observation from the study is the role of investment which was found to have a positive effect on economic growth. This result also supports the idea of promoting investment if the country is to achieve sustainable economic growth.