Abstract

Southeast Asia’s high saving rates have received much attention from researchers and policymakers alike, not least because they have been associated with great economic success. From 1970 to 1995, the rate of private saving rose continuously, from 15 percent to 25 percent of GDP, and the region’s real per capita GDP increased by almost 200 percent. This association has given rise to the question of whether there is a causal link between high saving and high growth and rapid development. Such a link seems to be confirmed by the experiences in other developing regions: in Latin America, saving rates have stayed broadly constant since 1970 and real per capita GDP has increased by only 35 percent; in sub-Saharan Africa, saving rates were actually lower in 1995 than they were in 1970, as was real per capita GDP. Thus, understanding the driving forces behind Southeast Asia’s high saving might help improve our understanding of the comparative growth performance across the two regions.