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THE IMPACT OF SAVINGS IN ECONOMIC GROWTH: AN EMPIRICAL STUDY BASED ON BOTSWANA
ABSTRACT
The purpose of this paper is to investigate the role of savings in Economic growth in Botswana. Botswana is one of the most successful resource-rich countries in the world. The study applied the Harrod –Domar growth model to the Economy of Botswana. In this study test is based on Auto Regressive Distributed Lagged (ARDL) model by Pesaran, Shin and Smith (1999) to check the existence of a long run relationship between Gross Domestic Product and Gross Domestic savings in Botswana. This study further used DOLS approach in order to identify dynamic long run co integration between GDP and its independent variables. The study tested the stationarity and co integration of Botswana’s time series data for the period of 1980 to 2013. The test found out that there is significant relationship between Savings and Economic growth and the study supported Harrod Domar growth Model. Policies are suggested to accelerate Economic growth in the country.
Keywords: Savings, Economic Growth, Botswana, ARDL, DOLS, & Harrod Domar.