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The Rise of Developing Countries and the Future of Global Saving and Investment

Author

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  • Bussolo, Maurizio
  • Lim, Jamus Jerome
  • Maliszewska, Maryla

Abstract

This paper examines the evolution of saving, investment, and associated capital flows and rates of return in the context of impending changes in socioeconomic structure of countries in the global economy. A baseline is constructed for the 2011–2030 period by considering how structural factors—in particular, demographic trends, financial development, institutional quality, and social protection—interact with likely productivity and population paths to determine saving rates, investment rates, and capital flows for major economies and regions. The main finding— which stands in contrast to the existing literature that argues for either continued, low interest rates or sharply rising ones—is that future global investment and saving rates will decline only slightly, accompanied by modest rises in interest rates, although substantial heterogeneity exists at the country or regional level. The paper also considers a range of perturbations to the basic model and verifies that the overall message of fairly limited changes in global investment and saving rates remains reasonably robust, even in a scenario with rapid global growth and structural change.

Suggested Citation

  • Bussolo, Maurizio & Lim, Jamus Jerome & Maliszewska, Maryla, 2014. "The Rise of Developing Countries and the Future of Global Saving and Investment," Conference papers 332532, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332532
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    File URL: https://ageconsearch.umn.edu/record/332532/files/6874.pdf
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    References listed on IDEAS

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    1. Thomas W. Hertel & Terrie Walmsley & Ken Itakura, 2005. "Dynamic Effects Of The "New Age" Free Trade Agreement Between Japan And Singapore," World Scientific Book Chapters, in: Philippa Dee & Michael Ferrantino (ed.), Quantitative Methods For Assessing The Effects Of Non-Tariff Measures And Trade Facilitation, chapter 18, pages 483-523, World Scientific Publishing Co. Pte. Ltd..
    2. Djoni Hartono & Dominicus Savio Priyarsono & Tien Dung Nguyen & Mitsuo Ezaki, 2007. "Regional Economic Integration And Its Impacts On Growth, Poverty, And Income Distribution: The Case Of Indonesia," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 19(2), pages 138-153, July.
    3. Francois, Joseph & Bradley McDonald, 1996. "Liberalization and Capital Accumulation in the GTAP Model," GTAP Technical Papers 310, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    4. Thomas W. Hertel & Terrie Walmsley & Ken Itakura, 2005. "Dynamic Effects Of The "New Age" Free Trade Agreement Between Japan And Singapore," World Scientific Book Chapters, in: Philippa Dee & Michael Ferrantino (ed.), Quantitative Methods For Assessing The Effects Of Non-Tariff Measures And Trade Facilitation, chapter 18, pages 483-523, World Scientific Publishing Co. Pte. Ltd..
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