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.
AbuN. (2010). Saving–economic growth nexus in Nigeria, 1970–2007: Granger causality and co-integration analyses. Review of Economic and Business Studies, 3(1), 93–104.
2.
AbuAl-FoulB. (2010). The causal relation between savings and economic growth: Some evidence from MENA countries. Paper presented at the 30th Annual Meeting of the MEEA, Atlanta, GA, January, 2010.
3.
AdelakunO. J. (2011). The Nexus of Private Savings and Economic Growth in Emerging Economy: A case of Nigeria. Journal of Economics and Sustainable Development, 2(6), 30–58.
4.
AdelekeA. M. (2014). Saving–growth nexus in an oil-rich exporting country: A case of Nigeria. Management Science and Engineering, 8(3), 72–78.
5.
African Development Bank (ADB). (2014). African Statistical Yearbook, African Development Bank Group. Retrieved 7 April 2016, from www.afdb.org
6.
African Development Bank. (2015). African Development Bank Report 2015: Growth, Poverty and Inequality Nexus: Overcoming Barriers to Sustainable Development. Retrieved 22 February 2016, from www.afdb.org/reports
7.
AgrawalP. (2000). Savings, Investment and Growth in South Asia(Working Paper No 121). Indira Gandhi Institute of Development Research, India.
8.
AgrawalP.. (2001). The relation between savings and growth: Cointegration and causality evidence from Asia. Applied Economics, 33(1), 499–513.
9.
AgrawalP.SahooP.DashR.K. (2008). Savings Behaviour in South Asia(Working Paper No 264). India Ghandi Institute of Development Research, India.
10.
AlguacilM.CuadrosA.OrtsV. (2004). Does saving really matter for growth? Mexico (1970–2000). Journal of International Development, 16(2), 281–290.
11.
AnderssonB. (2000). On the causality between saving and growth: Long- and short run dynamics and country heterogeneity.
12.
AnoruoE.AhmadY. (2001). Causal Relationship between domestic savings and economic growth: Evidence from seven African countries. African Development Bank, 13(2), 238–249.
13.
BaharumshahA. Z.ThanoonM. ARashidS. (2003). Savings Dynamic in Asian Countries. Journal of Asian Economics, 13(6), 827–845.
14.
BankoleA. S.BasiruO. F. (2013). Relationship between Savings and Economic Growth in Nigeria. Medwell Journal of the Social Sciences, 8(3), 224–230.
15.
CaporaleG. M.PittisN. (1999). Efficient estimation of cointegrating vectors and testing for causality in vector autoregressions. Journal of Economic Surveys, 13(1), 3–35.
16.
CarrollC. DWeilD. N. (1994). Saving and Growth: A Reinterpretation. National Bureau of Economic Research (NBER), Paper No 4470.
17.
ClarkJ.MirzaS. A. (2006). Comparison of some common methods of detecting Granger non-causality. Journal of Statistical Computation and Simulation, 76(2), 207–231.
18.
DoladoJ.LutkepohlH. (1996). Making Wald tests work for cointegrated VAR systems. Econometric Reviews, 15(4), 369–386.
19.
DomarE. D. (1946). Capital expansion, rate of growth, and employment. Econometrica, 14(1), 137–147.
20.
GavinM.HausmannR.TalviE. (1997). Saving behaviour in Latin America: Overview and policy issues. In R.HausmannH.Reisen, Promoting Savings in Latin America. Paris: Organization of Economic Cooperation and Development and Inter-America Development Bank.
21.
GilesJ. A.MizraS. (1998). Some pretesting issues on testing for Granger non-causality (Econometric Working Papers, EWP9914). Canada, CA: Department of Economics, University of Victoria.
22.
GilesJ. A.WilliamsC. L. (1999). Export-led growth: A survey of the empirical literature and some non-causality results (Econometric Working Paper, EWP9901). Canada, CA: Department of Economics, University of Victoria.
HarrodR. F. (1939). Toward a dynamic economic growth. London: Macmillan and Co. Ltd.
25.
HundieS. K. (2014). Saving, investment and economic growth in Ethiopia: Evidence from ARDL approach to cointegration and TYDL Granger causality test. Journal of Economics and International Finance, 6(10), 232–248.
26.
JangiliR. (2011). Causal Relationship between Saving, Investment and Economic Growth for India-Does the Relation Imply (Munich Personal RePec Archive (MPRA), Paper 40002). Germany:University Library of Munich.
27.
KatirciogluS. TNaraliyevaA. (2006). Foreign Direct Investment, Domestic Saving and Economic Growth in Kazakhstan: Evidence from Co-integration and Causality Test. Investment Management and Financial Innovations, 3(2), 34–45.
28.
KeynesJ. M. (1936). The general theory of employment, interest and money. New York, NY: Harcourt Brace.
29.
KingR. G.LevineR. (1994). Capital fundamentalism, economic development, and economic growth. Carnegie-Rochester Conference Series on Public Policy, 40(1), 259–292.
30.
LewisW. A. (1955). Theory of economic growth. London: Allen and Unwin, Ltd.
31.
LooneyR. E. (1996). Private Saving and its Determinants in Pakistan: The Case of Pakistan. The Pakistan Development Review, 35(1), 49–70.
32.
LucasR. E. (1988). On the Mechanics of Economic Development. Journal of Monetary Economics, 21(1), 3–42.
33.
MasihL.PetersM. (2010). A revisitation of the savings–growth nexus in Mexico. Economics Letters, 107(2010), 318–320.
34.
MavrotasG.KellyR. (2001). Old wine in new bottle: Testing causality between savings and growth. The Manchester School Supplement, 69(1), 97–105.
35.
MenyahK.Wolde-RufaelY. (2010). Energy consumption, pollutant emissions and economic growth in South Africa. Energy Economics, 32(1), 1374–1382.
36.
MohanR. (2006). Causal relationship between savings and economic growth in countries with different income levels. Economics Bulletin, 5(3), 1−12.
37.
MühleisenM. (1997). Improving India’s Saving Performance, International Monetary Fund (IMF), Working Paper 197/4.
38.
NarayanP. K.NarayanS. (2006). Savings Behaviour in Fiji: An Empirical Assessment using the ARDL Approach to cointegration. International Journal of Social Economics, 33(7), 468–480.
39.
OdhiamboN. M. (2008). Financial depth, savings and economic growth in Kenya: A dynamic causal linkage. Economic Modelling, 25(4), 704–713.
40.
OdhiamboN. M.. (2009). Savings and economic growth in South Africa: A multivariate causality test. Journal of Policy Model, 31(5), 708–718.
41.
OdhiamboN. M.. (2014). Electricity Consumption, Exports and Economic Growth in the Democratic Republic of Congo: An ARDL–Bounds Testing Approach. Journal of Developing Areas, 48(4), 189–207.
42.
OlajideS. O. (2010). Does Saving Really Matter for Growth in Developing Countries? The Case of a Small Open Economy. International Business and Economics Research Journal, 9(4), 361–373.
43.
PalleyT. I. (1996). Growth Theory in a Keynesian Mode: Some Keynesian Foundations for new Endogenous Growth theory. Journal of Post Keynesian Economics, 19(1), 113–135.
44.
PesaranM. H.ShinY.SmithR. (2001). Bounds testing approach to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326.
45.
RambaldiA. N. (1997). Multiple Time Series Models and Testing for Causality and Exogeneity: A Review(Working Papers in Econometrics and Applied Statistics, No. 96). Department of Econometrics, University of New England.
46.
RambaldiA. N.DoranT. E. (1996). Testing for Granger non-causality in cointegrated system made easy (Working Papers in Econometrics and Applied Statistics No. 88). New York: Department of Econometrics, University of New England.
47.
RomerP. M. (1986). Increasing returns and long-run growth. Journal of Political Economics, 94(5), 1002–1037.
48.
SajidG. M.SarfrazM. (2008). Savings and Economic Growth in Pakistan: An Issue of Causality. Pakistan Economics and Social Review, 46(1), 17–36.
49.
SaltzI. S. (1999). An Examination of the Causal Relationship between Savings and Growth in the Third World. Journal of Economics and Finance, 23(1), 90–98.
50.
SinhaD. (1999). Saving and Economic Growth in Sri Lanka. Indian Journal of Applied Economics, 8(3), 163–174.
51.
SinhaD.SinhaT. (1998). Cart before the horse? The saving–growth nexus in Mexico. Economics Letters, 61(1), 43–47.
52.
SodokinK. (2004). Functional and Structural Complementary of Banks and Microbanks in LDC, LEG Document de travail economie, 2006-10. Laboratorie d’economie et de Gestion, CNRS, Universite de Bourgogne.
53.
SolowR. M. (1956). A contribution to the theory of economic growth. Quarterly Journal of Economics, 70(1), 65–94.
54.
SolowR. M.. (1956). A contribution to the Theory of Economic Growth. Quarterly Journal of Economics, 70(1), 65–94.
55.
SwanT. W. (1956). Economic growth and Capital Accumulation. Economic Record, 32(2), 334–361.
56.
TangC. F.ChuaS. Y. (2009). The Savings–Growth Nexus in Malaysia: Evidence from nonparametric Analysis. Journal of Financial Economics, 7(3), 83–94.
57.
TangC. F.TanB. E. (2014). A revalidation of the savings–growth nexus in Pakistan. Economic Modeling, 36(2), 370–377.
58.
TodaH. Y.YamamotoT. (1995). Statistical inference in vector autoregressions with possibly integrated process. Journal of Econometrics, 66(1), 225–250.
59.
TuranG.GjergjiO. (2014). What is the impact of savings on growth? The case of a small open economy (Albania). Mediterranean Journal of Social Sciences, 5(13), 334–348.
60.
U.N. (2015). MDG Task Force Group Report, 2015: Taking Stock of the Global Partnership for Development, United Nations Department of Economics and Social Affair, United Nations, New York.
61.
VerhoefG.GreylingL.MwambaJ. (2014). Savings and Economic Growth: A historical Analysis of the Relationship between Savings and Economic Growth in the Cape Colony Economy, 1850–1909. Economic Research Southern Africa (ERSA), Working Paper 408.
62.
VermaR. (2007). Savings, Investment and Growth in India: An Application of the ARDL Bounds Testing Approach. South Asian Economic Journal, 8(1), 87–98.
63.
Wolde-RufaelY. (2005). Energy demand and economic growth: The African experience. Journal of Policy Modeling, 27(2), 891–903.
64.
Wolde-RufaelY.. (2009). Energy Consumption and Economic Growth: The Experience of African Countries Revisited, Energy Economics, 31(2), 217–224.
65.
World Bank. (1993). World Bank Report, 1993: The East Asian Miracle: Economic Growth and Public Policy. New York: Oxford University Press.
66.
World Bank. (2015). World Development Indicators. World Bank.
67.
World Bank. (2016). World Development Indicator. Retrieved 17 March 2016, from www.data.worldbank.org
68.
ZapataH. O.RambaldiA. N. (1997). Monte Carlo evidence on cointegration and causation. Oxford Bulletin of Economics and Statistics, 59(2), 285–298.
69.
ZerenF.EkremA. Y. (2013). Empirical Analysis of the Savings-Growth Nexus in Turkey. Journal of Business, Economics and Finance, 2(3), 352–367.
