Savings rates and income distribution: further evidence from LDCs

A cross-country test for the existence of Kaldor effects in less developed countries is developed. Earlier attempts have been inconclusive, and have led to a perception that the effect is unimportant. It is argued that previous tests may have ben misspecified. Within a standard life cycle framework, a savings rate function that also incorporates two distribution variables, one involving measures of income inequalities across income classes and the other a broad measure of inequalities among sectors, was specified and estimated. The results indicate that, regardless of the inequality measure employed, some sort of Kaldor effect may be at work. This suggests that the traditional conflect between growth and equity warrants continued investigation.

[1]  T. Weisskopf.  The impact of foreign capital inflow on domestic savings in underdeveloped countries , 1972 .

[2]  D. W. Adams.  Mobilizing Household Savings through Rural Financial Markets , 1978, Economic Development and Cultural Change.

[3]  Luigi Lodovico Pasinetti,et al.  Rate of Profit and Income Distribution in Relation to the Rate of Economic Growth , 1962 .

[4]  G. Papanek.  Aid, Foreign Private Investment, Savings, and Growth in Less Developed Countries , 1973, Journal of Political Economy.

[5]  J. Morisset.  The impact of foreign capital inflows on domestic savings reexamined: The case of Argentina , 1989 .

[6]  J. Enos,et al.  Foreign Assistance: Objectives and Consequences , 1970, Economic Development and Cultural Change.

[7]  J. Williamson.  Personal Saving in Developing Nations: An Intertemporal Cross‐Section from Asia* , 1968 .

[8]  S. Kuznets.  Economic Growth and Income Inequality , 2019, The Gap between Rich and Poor.

[9]  Finafrica.  Savings and development , 1977 .

[10]  N. Leff.  Dependency Rates and Savings Rates , 1969 .

[11]  N. Leff.  Dependency Rates and Savings Rates: Reply , 1971 .

[12]  Rati Ram.  Dependency Rates and Aggregate Savings: A New International Cross-Section Study , 1982 .

[13]  K. L. Gupta.  Dependency Rates and Savings Rates: Comment , 1971 .

[14]  A. Mason,et al.  The variable rate-of-growth effect in the life cycle saving model. , 1982 .

[15]  P. Musgrave.  Income Distribution and the Aggregate Consumption Function , 1980 .

[16]  N. A. Adams.  Dependency Rates and Savings Rates: Comment , 1971 .

[17]  K. L. Gupta.  Personal Saving in Developing Nations: Further Evidence , 1970 .

[18]  Foreign aid and domestic savings in less developed countries: Some tests for causality , 1987 .

[19]  Richard E. Bilsborrow,et al.  Age Distribution and Savings Rates in Less Developed Countries , 1979, Economic Development and Cultural Change.

[20]  K. L. Gupta.  FOREIGN CAPITAL INFLOWS, DEPENDENCY BURDEN, AND SAVING RATES IN DEVELOPING COUNTRIES: A SIMULTANEOUS EQUATION MODEL , 1975 .

[21]  M. Rahman.  Foreign Capital and Domestic Savings: A Test of Haavelmo's Hypothesis with Cross-Country Data , 1968 .

[22]  Surjit S. Bhalla.  The role of sources of income and investment opportunities in rural savings , 1978 .

[23]  A. Kelley,et al.  Household Saving Behavior in the Developing Economies: The Indonesian Case , 1968, Economic Development and Cultural Change.

[24]  N. Oguchi,et al.  Distribution, the Aggregate Consumption Function, and the Level of Economic Development: Some Cross-Country Results , 1976, Journal of Political Economy.

[25]  H. Chenery,et al.  Development Alternatives for Latin America , 1970, Journal of Political Economy.

[26]  R. Mckinnon,et al.  Money and Capital in Economic Development , 1974 .

[27]  N. Kaldor.  Alternative theories of distribution , 1955 .

[28]  D. Snyder.  Foreign Aid and Domestic Savings: A Spurious Correlation? , 1990, Economic Development and Cultural Change.

[29]  H. Theil.  Introduction to econometrics , 1978 .