The relationship between savings-investment deficit and female labor force participation with economic growth: a panel data analysis based on different country groups

The realization of savings-investment balance is crucial for such an economic growth process of the countries that does not create debt and has stability. Increasing savings-investment debt may rise the current account deficit and external debt stock of countries and confronts them with the risk of economic crisis. Using data from 1990-2014 period for 65 countries that belong to different income groups, this study first examined the interactions between savings-investment deficit and economic growth employing panel data analysis. The existence of cross-sectional dependence is examined using Pesaran (2004) CD test and no dependency is found among these countries. In the case of cross-country independency, the stationary of series is investigated using Levin, Lin ve Chu Im, Pesaran ve Shin, Fisher ADF ve Fisher PP tests. Seeing that these tests reveal non-stationary of variables in levels, the entire analysis of the thesis are done taking the first-differences of variables. The method by which the regression models should be predicted is decided by the Hausman test, and the results obtained are also checked using the estimations coming from GMM method. As a result of the estimations obtained; the savings-investment deficit, for the medium and low income countries, is negatively associated with economic growth under the control of economic factors such as population, inflation, health spending and imports. Following this finding, this study also analyzed the role of female labor force participation on the savings-investment deficit and the impact of their interaction on economic growth for this group of countries. The entire analysis reveals that female labor force participation is a potential to lower the saving-investment deficit but is not sufficiently enough to create an amount of saving that will trigger economic growth.