Who Cares about Savings?--Part I

Posted by: Michael Mandel on June 01

In a world where money flows easily across national borders, does savings still matter for growth?

Here’s a simple and stupid experiment. Take the industrialized countries. If you knew which ones had a higher national savings rate in 1995, could you predict which ones would have better economic performance over the next ten years? Maybe not.

                   increase in real per capita GDP
                                 1995-2005               
Low savings countries             26.9%
Medium savings countries          30.1%
Medium savings countries
  (except Ireland)*               23.0%
High savings countries            21.4%
Not much benefit to being a big saver, is there?


Low savings countries (national savings rate less than 20% in 1995) are United Kingdom, United States, New Zealand,Iceland,Australia, Greece,Canada,and France.

Medium savings countries (national savings rate between 20% and 25% in 1995) are Denmark, Sweden, Ireland, Austria, Italy, Germany, Finland, and Spain.

High savings countries (national savings rate above 25% in 1995) are Belgium, Norway, Netherlands, Japan, Switzerland, and Korea.

*Ireland is an outlier in terms of its per capita GDP growth, so it may make more sense to omit it from the group.

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Reader Comments

Carol Anne Ogdin

June 20, 2005 11:32 AM

All this irrelevant drum-beating about "savings rates" shows an ignorance of fungibility. It matters not one whit whether I put my money in a savings account (and somebody else invests the pooled cash), or I put my money directly in the investment.

Why do government officials fret so over whether the investment is direct or indirect via savings (save whether there're savings to measure)? Maybe some of our economists need to study the dynamics of money.

Thank you for your interest. This blog is no longer active.

 

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Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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