Concessional foreign capital inflows and domestic savings across countries: Dependency hypothesis re-visited

Hasan, Mohammad S (2002) Concessional foreign capital inflows and domestic savings across countries: Dependency hypothesis re-visited. Journal of Economic Studies, 29 (6). pp. 388-422. ISSN 0144-3585. (The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided)

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Using the notions of unit root, cointegration theory and Granger-Akaike’s synthesis of modelling strategy, this paper examines the nature of stationarities, cointegration properties and Granger causal relationship between domestic savings and aid based on a sample of 27 developing countries. The KPSS unit root test results indicate that variables of interest in a trivariate vector autoregressive system such as aid inflows, domestic savings and income exhibit a dissimilar trend in the majority of countries, with the exceptions of Bolivia and Korea. The cointegration test results based on the Johansen and Juselius testing procedure found evidence of cointegration among the variables, domestic savings, aid and income in Bolivia and Korea. However, the presence and direction of causality between aid inflows and domestic savings are mixed across countries. Whilst the findings are indicative of a causal independence in a majority of the cases, little support is attached to either Griffin’s dependency hypothesis or Papaneck’s reverse causality hypothesis.

Item Type: Article
Uncontrolled keywords: Foreign investment; Developing countries; Cointegration; Capital markets; Economic growth; Macroeconomics.
Subjects: H Social Sciences
Divisions: Faculties > Social Sciences > Kent Business School > Accounting and Finance
Depositing User: Rebecca Stevenson
Date Deposited: 22 Jan 2010 14:20
Last Modified: 22 Jan 2010 14:20
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