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The Conundrum of Low Saving Rates in Latin America
Author(s) -
Reinhardt Nola
Publication year - 2008
Publication title -
development policy review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.671
H-Index - 61
eISSN - 1467-7679
pISSN - 0950-6764
DOI - 10.1111/j.1467-7679.2008.00431.x
Subject(s) - latin americans , inflation (cosmology) , economics , interest rate , developing country , development economics , economic growth , macroeconomics , political science , physics , theoretical physics , law
Despite extensive economic reforms during the late 1980s/early 1990s, Latin America's saving rates remain low. This article examines the saving behaviour of 18 Latin American countries in the 1976‐2000 period and compares it with that of 25 other developing countries. It finds that lower inflation, income growth and increased real interest rates on deposits have not had the expected effects on saving rates in Latin America. Instead, the determinants of saving behaviour appear to differ between the two groups of countries, and saving rates are affected by a degree of inertia. Although more research is needed, this indicates that the focus of the neoliberal economic reforms of the 1980s was misplaced.