South Asian Savings-Investment Link: A Comparative Reappraisal

Abstract

Due to mixed and inconclusive results in the existing literature, we look for the reassessment of the savings-investment dynamics for Bangladesh, India, Pakistan, Sri Lanka, and Nepal based on a country-case analysis over the period of 1972-2020. Amongst the individual economies, a cointegrating relationship is identified only for Pakistan. The short-run and long-run savings coefficients are significantly positive. Short-run and long-run causalities from domestic savings (% of GDP) to domestic investment (% of GDP) are observed. An increase in domestic savings (% of GDP) will, expectedly, boost domestic investment (% of GDP) in the South Asian developing economies under study.