Solow Growth Model dan Kausalitas Hubungan Saving dan Pertumbuhan Ekonomi: Perbandingan Negara Maju (High Level Income) dan Negara Berkembang (Upper-Middle Level Income)

Abstract

At a theoretical level, it is believed that there is a relationship between savings rates and economic growth. In this case, accumulated savings can be used for investment purposes, which will then encourage GDP growth in the short term. On the contrary, in Keynes's view, GDP growth actually triggers growth in the savings rate. Debate then emerged as to which factors were the cause of a country's economic growth. This research uses the Solow Growth Model theoretical approach, which states that under the assumption of a closed economy, the level of savings will influence the level of investment and in turn have an impact on economic growth. Based on these arguments, this research conducted a comparative analysis of two countries, namely Indonesia and Singapore, in the period 2008-2022. The research results show that there is a tendency in the same direction of causality between savings levels and economic growth, at the two extremes of country income levels. Indonesia as a country in the upper-middle income category, and Singapore as a country in the high income category, have economic growth rates caused by the level of capital accumulation through savings. So that policies related to savings accumulation will still be relevant in the future. For future research, it is recommended to consider the influence of other macro variables, considering that the Solow Growth Model requires long-term longitudinal analysis, so that distortion of macro variables such as interest rates can have an impact on the causality of the relationship.