The Conundrum of Low Saving Rates in Latin America

Author: Reinhardt, Nola¹

Source: Development Policy Review, Volume 26, Number 6, November 2008 , pp. 727-744(18)

Publisher: Blackwell Publishing

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Abstract:

Despite extensive economic reforms during the late 1980s/early 1990s, Latin America's saving rates remain low. This article examines the saving behaviour of 18 Latin American countries in the 1976-2000 period and compares it with that of 25 other developing countries. It finds that lower inflation, income growth and increased real interest rates on deposits have not had the expected effects on saving rates in Latin America. Instead, the determinants of saving behaviour appear to differ between the two groups of countries, and saving rates are affected by a degree of inertia. Although more research is needed, this indicates that the focus of the neoliberal economic reforms of the 1980s was misplaced.

Keywords: Latin America; neo-liberal reforms; saving rates; economic growth; liberalisation

Document Type: Research article

DOI: 10.1111/j.1467-7679.2008.00431.x

Affiliations: 1: Department of Economics, Smith College, Northampton, MA 01063, USA ( )., Email: nreinhar@email.smith.edu

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