Saving Transitions in Southeast Asia

Abstract

This paper examines the evolution of saving in five Southeast Asian countries over the period 1972-1991. In different ways, each of these economies experienced a "saving transition" during this time. Four of the five economies in the panel are now among the highest saving economies in the world, but their stellar saving rates are of comparatively recent origin. In the remaining economy, the Philippines, saving plummeted to Latin American levels from a comparatively high base. Our empirical analysis suggests that policy may have played an important part in influencing saving in these economies. Prudent budgetary policies, financial sector liberalization, and statutory saving schemes, where they have been applied, would all appear to have raised private saving. Saving performance also appears to have been assisted by strong economic growth and falling young age dependency. Reassuringly, from a statistical standpoint, we find that both income growth and government saving can be treated as "weakly exogenous" determinants of private saving in Southeast Asia.