Abstract

The study analyses the economics intuition that the domestic savings may determine the investments in a country. The assumption is tested on domestic savings between 1980 and 2015 in Southeast Asia economies and Hungary in a panel regression framework. The hypothesis is that domestic savings stimulate economic growth through investment financing and, thus, the high savings rate observed in Southeast Asian countries can contribute to the outstanding GDP growth in the region. The tests sort out the significant determinants of investments. Granger causality test is implemented as a control test for significance of determinants. The analysis successfully indicates the significance of domestic savings beside other variables, and confirms the hypothesis, namely, the domestic savings affect investments and indirectly the economic growth, while FDI does not prove to be significant.

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