Abstract
This article analyses the determinants of domestic savings in the West African Economic and Monetary Union (WAEMU), except for Guinea-Bissau. Members of the WAEMU are Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo. WAEMU member countries are working toward greater regional integration with unified external tariffs. The economic dynamism sought by each country could be beneficial to the mobilization of savings. Research into the determinants of savings is therefore of crucial importance for countries with a financing gap. The study covers the period from 1982 to 2017. The data used for this study come mainly from the World Bank (WDI). Using Dynamic Least Squares (DOLS), the study finds that domestic saving behavior is positively influenced by gross domestic product per capita, investment, life expectancy at birth, and the lending rate. On the other hand, primary school enrolment, trade openness, and inflation negatively affect domestic savings.
Highlights
The founding works of growth analysis, carried out in particular at the theoretical level by Solow (1956) and, at the empirical level, by Denison (1967), allow an initial diagnosis of the causes of growth or lag in an economy
The purpose of this study was to analyze the determinants of domestic savings in the West African Economic and Monetary Union (WAEMU)
We can say that this study has allowed us to highlight some favorable factors of domestic savings, which are: GDP per capita, investment, life expectancy and bank lending rates
Summary
The founding works of growth analysis, carried out in particular at the theoretical level by Solow (1956) and, at the empirical level, by Denison (1967), allow an initial diagnosis of the causes of growth or lag in an economy. The working population, and technical progress are the essential sources of economic growth. Especially low savings rates, is considered one of the causes of the development lag of African countries. The economic performance of emerging countries is partly explained by the availability of savings. On average, these countries have managed to invest massively without running recurrent external deficits, i.e. without structurally relying on foreign savings to finance their investments. In a world where capital mobility is imperfect, or at least where potential investors avoid economies with serious macroeconomic risks, the availability of abundant national savings is certainly the best guarantee of investment dynamism. The situation of WAEMU countries is worrying insofar as all eight countries in the Union, since 1995, remain low-income countries with an average growth rate of 3.7% for the zone over the period 1995 - 2010 (WDI, 2017)
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