Answer to Question #283267 in Macroeconomics for yenew

Question

Collect data on National Saving of Ethiopia from 1991 to 2020 for the last 30 years and depict them via graph and compare it with average saving rate for Sub-Saharan Africa. Discuss the major macro policy issues that determines national saving in developing countries and their effects on saving (10 marks)

Answer 1

Solution:

National Saving of Ethiopia:

National saving in developing countries and their effects on saving:

Saving rates around the world vary widely: on average East Asia saves more than 30 percent of gross national disposal income, while Sub-Saharan Africa saves less than 15 percent. Regional differences have been rising: over the past theree decades saving rates have doubled in East Asia and stagnated in Sub-Saharan Africa and in Latin America and the Carribean.

Across countries higher savings rates tend to go hand in hand with higher income growth - a fact has been taken as proof of the existence of both virtuous cycles of saving and prosperity and poverty traps of insufficient savings and stagnation.