Impact Of Saving Rate On Economic Growth Of SAARC Nations

As heart is important organ for human body,finance is the point of convergence of an economy,whereas savings and globalization are its tubes and vessels.This study analyzed the Impact of national saving on economic growth of SAARC nations.This study included seven out of eight SAARC economies namely Afghanistan,Bangladesh,Bhutan,India,Nepal,Srilanka and Pakistan.Data set of these SAARC nations is collected from World development indicator 2016 and it is utilized to probe the impact of national savings on economic growth of these nations for the time period of 1960 to 2016.Theoretical results show that gross savings contribute positively on economic growth of SAARC countries as explained by Harrod Domar Growth model.Unit root test and co integration method is used for purpose of estimation.Econometric analysis shows that saving is the main factors that is positively and significantly affecting total growth rate of these countries.For SAARC economies the savings is an important macroeconomic variable as a result of more savings results in additional investment that generates economic process,therefore savings is most vital factor for economy to grow and develop.The results have implication for policy making there is a need to expand national saving schemes in SAARC economies there is need to launch a comprehensive campaign to explain the worth of saving that encourage savers thus the saving of SAARC economies will increase and as a result the economy will move towards economic growth.The finding of this study is that Savings has a positive and strong effect on the economic growth.Our econometric analysis shows that saving is the main factors that is positively affecting total growth rate of these countries.