DOES SAVING REALLY MATTER FOR GROWTH IN TRANSITION COUNTRIES? THE CASE OF A SMALL OPEN ECONOMY: ALBANIAN APPLICATION.

Abstract

This paper is aiming to analyze the linkage between savings and the economic growth in transition countries. Savings are composed of household savings, corporate savings and government savings. The aggregate of these savings make up the Gross National Savings, which contribute to the capital accumulation which is one of the sources of economic growth according to the Solow Model. The effect of this component can not be studied independent of other factors that determine economic growth, which are labor force and TPF. First, it is necessary to describe some of the characteristics of transition countries, focusing in Albanian case. Then the saving trend will be studied. The study will reveal us how these three factors contribute to the economic growth in different stages of transition in Albania. The data for the savings and economic growth will be taken from official sources, such as the statistics of INSTAT, the BoA and Economy watch.com taking into account a period of time from 2000 to 2011. This paper uses the linear regression analysis to analyze the relationship between economic growth and savings.