Convergence Between the EU and Central and Eastern Europe
Edited by David G. Dickinson and Andrew W. Mullineux
Chapter 14: Mobilization of savings in transition countries: the case of Lithuania
Dalia Vidickieneù, Salomeùja Jasinskaiteù and Rasa Melnikieneù INTRODUCTION Notwithstanding the huge importance of saving for the economy, savings regularities in transition countries still remain one of the least investigated subjects. The scanty literature that does analyse specific features of saving in transition countries restricts itself to a mere mention of such abstract factors making an impact on the savings behaviour as Ôchoice of reform sequencingÕ and reform strategy, that is, Ôbig bang or gradualismÕ (De Melo et al. 1995; Schmidt-Hebbel and Serven 1997). However, these factors relate only to what has already occurred and are suitable only for a comparative analysis of countries. Such an analysis is of little practical use when searching for ways to increase the scale and rate of saving. Therefore, it is not surprising that the process of saving in transition countries has so far been ignored, while depreciation and compensation of savings are being addressed for political reasons, since the theory of economics cannot provide an answer concerning the basis for optimal decisions. This chapter analyses changes to the savings rate in transition countries and the need for these countries to mobilize domestic savings. The chapter has four further sections. The next section includes a survey of the main modern theories of saving and evaluates whether they can predict savings behaviour in transition countries. After analysing the actual situation during the first years of reform, we shall investigate the main reasons for the decrease in the savings rate. The third section analyses the characteristic...
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