National Savings
NATIONAL SAVINGS
Rana HFAIEDH
AVICENNE PRIVATE BUSINESS SCHOOL / UBIS UNIVERSITY
ABSTRACT
National saving plays a very important role in the world economy and has huge implications for economic growth. It provides the resources for a nation to invest domestically and abroad.
Specially in developing countries there is a close association between national savings and domestic investment. But this is changing, since most of the economies are open and capital flows are very mobile.
This essay, will explain how does national saving affect the economy and how countries can benefit from using these savings domestically and internationally.
NATIONAL SAVINGS AND IMPLICATION ON ECONOMIC GROWTH
“National saving can be used domestically or internationally. Explain the basis of this statement, including the benefits to the nation of each use of its saving.”
First of all, let’s understand the concept of national savings.
In economics, a country 's national savings is the sum of private savings (i.e. personal savings) plus the business savings (i.e. undistributed corporate profits) and public savings (i.e. tax revenues less public expenditure). (economicswebinstitute.org, 2003) & (Wikipedia.org, 2008).
So in simple words, what people save i.e. when they avoide to consume all their income, is called "personal savings". These savings can remain on the bank accounts for future use.
For the economy as a whole, national saving is the portion of the nation’s income not used for private and public consumption.
Just as for people, saving for the national economy is the act of setting some of current income aside for the future instead of spending it for current consumption. (Gao.gov, 2001).
So the savings left in bank accounts are an important part of money. This money could be used by banks, which can decide to finance businesses. The amount of money used for investment depends on the deposits, which banks receive. So an increase of personal savings and/or corporate
Rana HFAIEDH
AVICENNE PRIVATE BUSINESS SCHOOL / UBIS UNIVERSITY
ABSTRACT
National saving plays a very important role in the world economy and has huge implications for economic growth. It provides the resources for a nation to invest domestically and abroad.
Specially in developing countries there is a close association between national savings and domestic investment. But this is changing, since most of the economies are open and capital flows are very mobile.
This essay, will explain how does national saving affect the economy and how countries can benefit from using these savings domestically and internationally.
NATIONAL SAVINGS AND IMPLICATION ON ECONOMIC GROWTH
“National saving can be used domestically or internationally. Explain the basis of this statement, including the benefits to the nation of each use of its saving.”
First of all, let’s understand the concept of national savings.
In economics, a country 's national savings is the sum of private savings (i.e. personal savings) plus the business savings (i.e. undistributed corporate profits) and public savings (i.e. tax revenues less public expenditure). (economicswebinstitute.org, 2003) & (Wikipedia.org, 2008).
So in simple words, what people save i.e. when they avoide to consume all their income, is called "personal savings". These savings can remain on the bank accounts for future use.
For the economy as a whole, national saving is the portion of the nation’s income not used for private and public consumption.
Just as for people, saving for the national economy is the act of setting some of current income aside for the future instead of spending it for current consumption. (Gao.gov, 2001).
So the savings left in bank accounts are an important part of money. This money could be used by banks, which can decide to finance businesses. The amount of money used for investment depends on the deposits, which banks receive. So an increase of personal savings and/or corporate
References: (1) Valentino Piano (2003), Savings retrieved from http://www.economicswebinstitute.org/glossary/savings.htm (2) United States General Accounting Office (June 2001), National Savings: Answers to key questions retrieved from http://www.gao.gov/assets/210/201778.pdf. (3) Wim Boonstra (May 2009), Ageing, national savings and the international investment position: what does the current account tell us? retrieved from http://www.feweb.vu.nl/en/Images/paper%20boonstra_tcm97-110281.pdf (4) National savings (2008) retrieved from http://en.wikipedia.org/wiki/National_savings (5) Pierre Olivier Gourinchas and Olivier Jeanne (October 2011), Capital flows to developing countries, retrieved from http://socrates.berkeley.edu/~pog/academic/allocation_october11.pdf