An Empirical Study On The Relationship Between Savings, Investment And Economic Growth In The World’s Major Economies

The global financial crisis that occurred from 2007 to 2009 had a negative impact on the economic growth of countries around the world.After decade passed,the global economy has been weak for a long time and the economic recovery has been declining year by year.However,there are still some emerging economies represented by developing countries that have maintained a high growth rate while developed countries have failed to play an engine role in driving worldwide economic.With the deepening of global economic integration,economic blocs play more important roles in the world economic system.Indicators such as savings,investment and economic growth are important for measuring the economic development worldwide and the interaction among them will have a decisive impact on the level of local economic development.Therefore,it is vital to find out the relationship among them.This thesis selects several economic figures that from 1989 to 2018 involving the domestic savings,domestic capital formation,foreign direct investment inflow,foreign direct investment outflow and the total gross domestic product(GDP)from 32 economic blocs and countries in total such as the BRICS,Association of Southeast Asian Nations Economies,the European Union,the United States,Japan,Australia,etc.Based on the comprehensive analysis of data and dig deep,using literature analysis,descriptive statistics,and empirical analysis,analyses the relevant indexes of savings and investment on the impact of economic growth:The first is to define the economic indicators and literature review the classical economic growth theory and related empirical studies.Then,through the horizontal comparison of regions and vertical comparison of time,descriptive statistics are conducted on different economies from the perspectives of GDP,GDP growth rate,savings rate,foreign direct investment inflow,foreign direct investment outflow and total capital formation in the form of text,line chart,pie chart and table.Thirdly,in the empirical aspect,the Panel-VAR model was used for analysis,and the empirical results were analyzed through the comprehensive use of stationarity test,co-integration test,granger causality test,impulse response function and variance decomposition.The innovation of this thesis lies in that it covers a wide range of economies and the indicator system selected is clear:the three indicators "Total Domestic Capital Formation(Total Domestic Investment)","Foreign Direct Investment Inflow" and "Foreign Direct Investment Outflow" are all included in the investment index.Combining descriptive statistics and empirical research,this thesis conducts a comprehensive investigation which involves economics as many as possible.Meanwhile,in order to achieve overall results while not neglecting individual samples,this paper also classifies and examines different groups of economic organizations and draws the following conclusions:(1)Economic development in different countries is not balanced,its economic structure reflects the different characteristics of the traditional western developed countries is easy to be affected by global economic fluctuation,and the impact is relatively small in the emerging world’s economy;(2)There is a long-term equilibrium relationship between the indicators of savings and investment and GDP,in which the total domestic savings,foreign direct investment and foreign direct investment are causal relations with GDP respectively;(3)Only the positive change of domestic gross savings always provides a positive boost to economic growth,while foreign direct investment inflow,foreign direct investment outflow and domestic capital formation have different directions of influence on different economic organizations,which reflects the differences among different economies;(4)Among all indicators of investment and savings,domestic gross savings contributes the most to economic growth and plays a significant role among BRICS.The contribution of savings to the economic growth of developed countries is lower than the historical fluctuations of GDP considering their advantages of GDP size and the tradition of low savings.