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GTAP Resource #4389

"The Rise of Developing Countries and the Future of Global Saving and Investment"
by Bussolo, Maurizio, Jamus Lim and Maryla Maliszewska

The global economy is in the midst of sweeping changes, all of which will continue to play out over the coming decades. Between 1970 and 2000, high-income countries commanded a steady four-fifths of global output, saving, and investment. By 2010, they accounted for about half, and this share is set to further erode into the future, especially if developing countries continue to grow at twice the rate as the nations of the developed world. The developing world--which used to be regarded as in desperate need of saving to finance their capital formation--is now seen as the source of excess saving, inducing a global saving glut.

These changes in economic activity have occurred, and will continue to evolve, alongside shifts in the fundamental structure of the worlds economies, especially in the developing world. Asynchronicities in the timing, pace, and magnitude of countries demographic transitions means that certain regions of the world will experience significant growth in their working-age populations, while others will see substantial contractions. And if other structural and institutional factors--such as the level of financial development and the quality of political-economic institutions--continue to follow the trends that have developed in the recent past, their evolution will further accelerate convergence between the global North and South.

Abstracting from short term fluctuations and focusing on the long term--defined here as ten to twenty years into the future--what will these impending changes mean for global saving and investment? More specifically, will the world---r perhaps some individual countries--need more or less capital than what will be available from savers? And, finally, what will the consequences be for long-term interest rates?

One plausible answer to this set of questions, articulated in Dobbs et al. (2010), is that impending demographic changes in high-income and East Asian countries--in the form of population aging--will entai...

Resource Details (Export Citation) GTAP Keywords
Category: 2014 Conference Paper
Status: Published
By/In: Presented at the 17th Annual Conference on Global Economic Analysis, Dakar, Senegal
Date: 2014
Created: Bussolo, M. (4/10/2014)
Updated: Bussolo, M. (4/10/2014)
Visits: 1,313
- Calibration and parameter estimation
- Dynamic modeling
- Economic development
- Economic growth

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