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Article Dans Une Revue IMF Economic Review Année : 2016

When Does Domestic Savings Matter for Economic Growth?

Résumé

Can a country grow faster by saving more? The paper addresses this question both theoretically and empirically. In the theoretical model, growth results from innovations that allow local sectors to catch up with frontier technology. In poor countries, catching up requires the cooperation of a foreign investor who is familiar with the frontier technology and a domestic entrepreneur who is familiar with local conditions. In such a country, domestic savings matters for innovation, and therefore growth, because it enables the local entrepreneur to put equity into this cooperative venture, which mitigates an agency problem that would otherwise deter the foreign investor from participating. In rich countries, domestic entrepreneurs are already familiar with frontier technology and therefore do not need to attract foreign investment to innovate, so domestic savings does not matter for growth. A cross-country regression shows that lagged savings is positively associated with productivity growth in poor countries but not in rich countries.

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Dates et versions

halshs-01496930 , version 1 (28-03-2017)

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Philippe Aghion, Diego Comin, Peter Howitt, Isabel Tecu. When Does Domestic Savings Matter for Economic Growth?. IMF Economic Review, 2016, 64 (3), pp.381 - 407. ⟨10.1057/imfer.2015.41⟩. ⟨halshs-01496930⟩
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