The Determinants of National Savings in West African Countries: A Time Series and Dynamic Panel Data Analysis

The objective of this paper is to analyze the determinants of national savings in West African countries, using both time series analysis and panel data over the period 1980–2020. To do so, we used the Autoregressive Distributed Lag (ARDL) model through the cointegration approach of boundary tests to check the robustness of the long-run relationship and the error correction mechanism (ECM) to capture the short-run dynamics between savings and its determinants. The results revealed that domestic income was a statistically significant determinant of national savings in the short and long run in West Africa. Based on the empirical results of the panel data, the results reveal that the current account positively influences savings in English countries in both the short and long run. On the other hand, domestic income and value added in agriculture were found to be determinants of savings in Francophone countries. It is recommended that, in order to promote savings, growth and economic development, policies aimed at improving labor productivity and the balance of trade are essential to increase savings rates in West Africa.