SIGNIFICANCE OF NATIONAL SAVING IN THE SOCIO-ECONOMIC DEVELOPMENT OF PAKISTAN: 1974-2009

Both saving and investment are crucial for the socio-economic development through capital accumulation. The data on foreign, domestic and national savings of Pakistan shows fluctuation during 1970 to 2009. Though, data on national saving shows downward trend in many developing countries during the last three decades including Pakistan. For examining the impact of per capita income, lagged saving and inflation rate on national saving, secondary annual data ranging from 1974-2009 has been utilized. Simple linear regression model and the method of least squares have been used. The empirical results shows positive impact of per capita income, and lagged saving rate on national saving of Pakistan and strongly supports the study hypothesis but the impact of inflation rate has been found negative on national saving of Pakistan. Thus, it has been concluded from these results that per capita income needs to be increase and inflations needs to be controlled in order to increase the level of national saving because the significance of saving is highly important for improving economic development. In addition, the management authority needs to formulate policies which are favorable and according to the present environment of the economy to enhance the level of national saving in order to boost national economic development of the country.