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Pension reform, the stock market, capital formation and economic growth: a critical commentary on the World Bank's proposals

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  • Singh, Ajit

Abstract

Abstract Proposing far-reaching reforms to the pension systems, the World Bank has recently suggested that the existing pay-as-you-go pension systems in many rich as well as poor countries, should be replaced by fully funded, mandatory, preferably private pensions, as the main pillars of the new system. It argues that these reforms will not only benefit the pensioners, but also enhance savings, promote capital formation and economic development. This paper provides a critical examination of the Bank's theses and concludes that it has adopted a one-sided view of the relationships between the key critical variables. The proposed reform may therefore neither protect the old nor achieve faster economic growth.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 54924.

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Date of creation: 29 Apr 1996
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Publication status: Published in International Social Security Review 3.49(1996): pp. 21-44
Handle: RePEc:pra:mprapa:54924

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Keywords: Pensions; World Bank; private; mandatory; economic development; savings;

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  1. Stewart C. Myers, 1984. "Capital Structure Puzzle," NBER Working Papers 1393, National Bureau of Economic Research, Inc.
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Cited by:
  1. World Bank, 2000. "Nicaragua : Pension Reform Proposal," World Bank Other Operational Studies 14972, The World Bank.
  2. Anna Zalewska, 2006. "Is Locking Domestic Funds into the Local Market Beneficial? Evidence from the Polish Pension Reforms," The Centre for Market and Public Organisation 06/153, Department of Economics, University of Bristol, UK.
  3. Srinivas, P.S. & Whitehouse, Edward & Yermo, Juan, 2000. "Regulating private pension funds’ structure, performance and investments: cross-country evidence," MPRA Paper 14753, University Library of Munich, Germany.
  4. Roberto J. Santillán Salgado & David López & Justo Montenegro, 2010. "Las Administradoras de Fondos de Pensiones y el desarrollo del mercado de capitales en Chile," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(2), pages 53-76, November.
  5. Cerda, Luis & Grandolini & Grandolini, Gloria, 1998. "The 1997 pension reform in Mexico," Policy Research Working Paper Series 1933, The World Bank.
  6. Zalewska, Anna, 2006. "Is locking domestic funds into the local market beneficial? Evidence from the Polish pension reforms," Emerging Markets Review, Elsevier, vol. 7(4), pages 339-360, December.
  7. Reece, Christopher & Sam, Abdoul G., 2012. "Impact of Pension Privatization on Foreign Direct Investment," World Development, Elsevier, vol. 40(2), pages 291-302.

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