The results presented for countries grouped according to their per capita income
(low, middle, and upper income) for SIY and g equations do not provide strong support
for the hypothesis that the determinants of savings and economic growth rates differ
according to per capita income.
From the pooled regression, we see the negative effect of the dependency rate on
the savings rate and the economic growth rate for all income groups. This indicates
that whatever the developmental level, high birth rates and dependency ratios are
detrimental to a country's capacity to save, invest, and grow. Based on this evidence,
government programs to educate the public about birth control and limited family size
would help improve the standard of living.
The group-country estimates of the impact of capital inflows rate (on the domestic
savings rate and on the economic growth rate) show no conclusive general relationships.
However, the pooled regression results cast doubts that capital inflows
contribute to overall savings and thereby to output. Moreover, the net contribution of
domestic savings to development is much higher and statistically significant than that
of capital inflows. suggesting that governments in LDCs should stress mobilizing
domestic resources rather than relying on capital inflows.