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Capital for the Future: Saving and Investment in an Interdependent World (Global Development Horizons)
Capital for the Future Saving and Investment in an Interdependent World - Global Development Horizons Author:The World Bank Will aging societies starve the global economy of capital as the elderly draw down their stock of savings? Or will investment opportunities decline more rapidly than savings as global labor force growth slows down? How will future patterns of saving and investment affect interest rates, capital flows and ultimately development? Global Developmen... more »t Horizons 2013 seeks to answer these and other looming questions by creating scenarios in which three long-term structural forces ? economic convergence, demographic transition, and financial globalization ? interact to determine patters of investment, saving, and capital flows through 2030. Already, these factors have produced dramatic shifts in the global economy. Developing countries currently contribute almost half of the world?s investment and savings, more than double the share of the mid-1960s in the case of investment and more than quadruple in the case of savings. To varying degrees, all of these forces will remain in play in the future. Elaborating a picture of how investment and saving will be impacted by these long-term drivers thus is eminently relevant for current policymaking. The world will not run out of savings in the future, and interest rates will remain fairly stable. Slowing saving rates will challenge policymaking in several regions, however?namely, East Asia. Sub-Saharan Africa will be the only region where saving rates do not decline. China and India will account for the majority of global investment by 2030. These shifting geographic patterns of saving and investment will be manifested in significantly changed patterns of global capital flows. Presently, developing countries account for three-quarters of global growth, while they represent a disproportionately low one-quarter of gross capital inflows. By 2030, developing countries will dominate here as well, receiving nearly two-thirds of global inflows. Global Development Horizons (GDH) is an annual report of the World Bank that aims to stimulate new thinking and research on the changing character of the world economy and its implications for development.« less