Contributions to Political Economy (1996) 15, 105-115

NOTES ON INVESTMENT, SAVING AND

GROWTH*
ANTONELLA PALUMBOf
Universita di Roma Tre

In the twice-yearly published World Economic Outlook the International Monetary

Fund (IMF) surveys the current state of economic affairs, expresses its views on the
prospects of the global economy and the single countries and suggests policies to be
adopted. In this influential publication one theme has often been mentioned in
recent years and is extensively dealt with in the May 1995 issue: the need for high
saving in order to promote economic growth, and the related idea that the observed
decreasing trend in world saving rates in recent years, together with the high level
of interest rates prevailing since the 1980s, may point to a tendency in the world
economy towards a saving shortage, which could, in the opinion of the IMF, put
serious checks on growth opportunities in the near future.
The idea of a positive relation between saving and growth is founded on the
traditional proposition that an increase in the propensity to save, by enhancing
accumulation, has a favourable effect on output growth. This idea seems to be very
popular with international economic institutions such as the IMF and the World
Bank: they urge both developed and developing countries to take any policy
measure that could promote the private propensity to save and to do as much as
possible to check public deficits, which are seen as a major threat to growth, since,
by causing a 'drain' on private saving, they supposedly reduce the quantity of saving
available for productive investment.'
The aim of these notes is to discuss this position which, for all its popularity, can
be seriously challenged from a theoretical point of view. The discussion, however,
will mainly focus on the meaning of the empirical evidence that the IMF produces
in the World Economic Outlook of May 1995 to support its positions. In particular,
the IMF draws attention to the existence of a positive correlation, in cross-country
data, between the rate of growth of output and the share of gross saving in gross

* Reviewing: International Monetary Fund, World Economic Outlook, May 1995, Washington,
DC.
fThanks are due to P. Garegnani, A. Campus, R. Ciccone, P. De Muro, G. De Vivo, G. Scarano, A.
Trezzini, F. Vianello, and the participants to two seminars held in Rome, for their useful comments.
'In addition to the publication under review, see, for instance, World Bank (1984, pp. 20-21), World
Bank (1989, pp. 25-32); Aghevli a al. (1990); IMF (1991, p. 48 and passim).

0277-5921/96/010105 + 11 825.00/0 © 1996 Academic Press Limited

106 A. PALUMBO

domestic product, a result already established in some of the recent empirical

literature on economic growth.1
It will be shown, however, how this evidence cannot be taken to confirm, and
even seems to contradict, the standard growth theory proposition it allegedly proves.
Interestingly enough, the IMF itself finds the evidence problematic, in particular
because it seems to point to the existence of a positive effect of growth itself on the
share of gross saving in output — a reversal in the direction of causation — which is
quite unexpected from the point of view of traditional theory.

I
The standpoint of the IMF is that 'higher saving raises the growth rate of output by
increasing capital accumulation' (p. 70). Two different theoretical ideas are in-
volved in this proposition. The first is the dependence of accumulation on the
decisions to save; the second the existence of a strict relationship between
accumulation and growth. In discussing the former, the latter will for the moment
be taken for granted by assuming given technical conditions of production. In this
way the possibility is provisionally ruled out that an increase in the rate of growth of
output be obtained, through an increase in productivity induced by some suitable
form of technical progress, without any change in the amount of investment. This
simplifying assumption will however be relaxed later.
As a first step, the relation will be examined between the propensity to save, the
decisions to invest, and the rate of growth of total output, with the additional
simplifying assumption of a closed economy without Government intervention.
The idea of a favourable effect of the propensity to save on accumulation (and
hence on output growth)2 strictly depends on the presumed tendency of the
economic system to achieve, in the long period, the level of production which
corresponds to full utilisation of productive capacity.3 An enhanced propensity to
save will in fact produce an increased amount of investment if some mechanism
exists that equates the decisions to invest to the decisions to save in conditions of full
1
See, e.g., Aghevli et al. (1990, pp. 42-43); Levine and Renelt (1992, p. 947); Pack and Page (1994,
p. 216).
2
The proposition that a high propensity to save is favourable to growth holds, in general terms, for all
different versions of traditional growth theory. As is well known, in Solow's model an increase in the
propensity to save produces no effects on the steady-state rate of output growth. However, it raises the
equilibrium level of per capita output, thus allowing a greater per capita output to grow at the steady-state
growth rate. It must be noted that the empirical results to be discussed in the next section, which appear
to establish a positive correlation between the propensity to save and the growth rate of output, are
generally interpreted as not conflicting with the conclusions of Solow's model by assuming that they
represent the transitional effect of a higher propensity to save on the growth rate, before a new
steady-state is attained (see, e.g., Gersovitz 1988, p. 383).
3
Productive capacity is denned as the output which is obtainable through the normal use of the
existing equipment when operated with the appropriate amount of labour. On the concept of 'normal'
utilisation of capacity, see Garegnani (1992, pp. 55-56), Ciccone (1986, pp. 25-28), Kurz (1986,
pp. 44-48).
 NOTES ON INVESTMENT, SAVING AND GROWTH 107

employment of capacity. At the same time, if output were determined by capacity,

no increase in the amount of investment, and thus in the rate of growth of output,
could be obtained unless a greater share of resources be diverted from current
consumption and devoted to accumulation.
It need not be recalled here how this traditional conception of the working of the
economic system has been challenged, both by questioning the ability of the interest
rate to bring about the equality between investment and full-employment saving
(and, more generally, the logical foundations on which this mechanism and the
whole traditional theory are built); and by showing how the Keynesian adjustment
mechanism between investment and saving, founded on changes in the level of
aggregate income, can be taken to work also in the long period, in which the
elasticity of output can be shown to be even greater in comparison with the short
period, thanks to the possibility not only of varying the degree of utilisation of
installed capacity, but also of creating (or destroying) capacity itself.
Once the validity of the presumed tendency to the full utilisation of capacity is
questioned, not only the proposition that a high propensity to save induces high
accumulation and thus high growth no longer holds, but, also, there is no reason to
assume that an increase in the rate of growth of output should necessarily entail a
rise in the share of investment (and saving) in income and a parallel compression in
the consumption share. An increase in the rate of growth brought about by a higher
level of investment, provided that output and capacity rise sufficiently in response to
the increased investment, may well leave the investment and saving share un-
affected. The growing income would generate the required increase in the amount
of savings, while the ratio between the two variables may conceivably remain
constant or move in any direction (depending on the possible variations, during
specific periods of fast growth, in the factors that autonomously affect the
propensity to save). In other words, to argue that an economy is enjoying fast
accumulation only because the investment share is comparatively high, would be
quite misleading: from what has been said it follows that the investment share in
output does not reflect the incentive to invest, but simply depends on the propensity
to save and on the complex of factors affecting it.
The result that the rate of output growth may increase with the investment and
saving share remaining constant needs some qualification once the simplifying
assumptions that have been made are removed. On the one hand, the investment
share and the saving share are, in fact, not perfectly coincident, since in an open
economy domestic saving equals the sum of domestic investment and net exports
(i.e., the balance-of-payments current account surplus). Assuming a constant
propensity to save, it may well happen that an increase in the level of investment and
in the rate of growth of output go together with a varying investment share. If the
period of fast domestic accumulation is characterised by such fast-growing external
demand as to produce an increase in the share of net exports in output, the domestic
investment share would decrease, as a result of output expanding faster than
investment for the presence of an additional source of demand. On the contrary, a
108 A. PALUMBO

growing external deficit would entail an increasing share of domestic investment

(since the growing imports would dampen the multiplicative effects of investment
on output). Something similar would happen for the effect of different budget
policies on the multiplicative power of investment (a budget deficit would enhance,
and a budget surplus would reduce it, thereby entailing, respectively, a reduction,
and an increase, in the investment share).
On the other hand, factors may be at work, during periods of fast capital
accumulation, affecting the propensity to save. One of them is represented by
Government policies, which through transfers and taxes determine the ratio
between personal disposable income and national income, thus influencing the
share of private saving in the national product.' What is relevant, however, is that,
while the saving share may well change — for the action of autonomous factors — in
coincidence with an increase in the rate of output growth, the latter may occur, as
a result of a rise in the time rate of investment, without necessarily enhancing the
saving share (i.e., without compressing the consumption share). At the same time,
since there is no reason to assume that investment is positively affected by the
availability of saving, a higher propensity to save would simply have the effect of
reducing the multiplicative power of investment, and would thus prove an obstacle
rather than a stimulus to growth.
Before entering the discussion of the empirical evidence, the simplifying assump-
tion of given technical conditions must be relaxed and the possibility must be
considered of an increase in the rate of growth of output, due to technical progress,
occurring without any change in accumulation (i.e., without any change in the time
rate of investment). This may happen, for instance, if the increase in the growth rate
is entirely due to some form of technical progress such that labour productivity
in the production of capital goods increases faster than in the production of
consumption goods; or such that the requirements of capital per unit of product
decrease.
The theoretical possibility that faster growth does not require higher accumu-
lation, while not altering the general terms of the previous reasoning, entails that
from the point of view of traditional theory an increase in the rate of growth of
output might also occur with the saving share in output remaining constant. The
observation of an increase in growth rates not accompanied by an increase in the
saving share could, in other words, be interpreted as not contradicting traditional
theory if it could be attributed to a change in productivity not entailing any change
in the level of investment. This point will be resumed later, in discussing the data
produced by the IMF (see end of next section): it will be argued that the instances
of high growth described by those data do not seem open to this kind of
interpretation, because the observed increases in growth rates are in most cases
part of a general process of development which is likely to have involved relevant

1
Some longer-run factors influencing the average propensity to save, that also might be at work in
specific periods of economic growth, will be briefly discussed in Section III.
 NOTES ON INVESTMENT, SAVING AND GROWTH 109

changes in capital accumulation.1 In the following analysis, it will thus be assumed

that the observed increases in the growth rate of output go generally together with
an increase in the time rate of investment.

II
The theoretical result on the basis of which there seems to be no reason to expect
that in the generality of cases higher growth rates in output should go together with
a higher share of saving in income, might at first sight appear to be contradicted by
the empirical evidence. According to the IMF, in fact, 'one of the most striking
regularities in cross-country data is the relationship between the rate of saving and
the growth of output. High-saving countries generally grow faster than do low-
saving countries' (IMF, 1995, p. 69). The evidence covers the 1973-1993 period;
the growth of output is defined as the average annual rate of growth of real per capita
GDP; while the rate of saving is denned as the average share of gross domestic
savings in gross domestic product.2 Other empirical analyses have established the
same kind of correlation on the basis of country observations covering either the
1960-1985 or the 1960-1989 period.3 There are, however, several reasons for
arguing that, on more careful examination, the empirical observations relied upon
by the IMF do not support the idea that high saving induces high growth.
In the first place, the positive correlation between the gross saving share and the
growth rate does not hold in the generality of cases. There are countries which have
a high saving share and do not enjoy fast growth (Switzerland is quoted by the IMF
as an example), and countries that succeed in growing fast without saving much
(Chile can be considered a case in point; see IMF, 1995, p. 70). More significantly,
the statistical result seems to depend heavily on the presence of a small group of
countries (in particular, the fast-developing Asian economies, i.e., South Korea,
Taiwan, Singapore, Hong Kong, Thailand, Indonesia, Malaysia, with the addition
1
In this respect, it must be noted that the rate of growth of per capita GDP, which the IMF uses as a
measure of growth, might appear to represent changes in productivity rather than in total output.
However, the economies that show, in the period under consideration, the highest rates of growth of per
capita GDP, also have the highest rates of total GDP growth; besides having the highest values of
variables that can be considered as indicators of extensive growth, such as the rate of growth of total
employment and that of manufacturing employment (see, for example, the World Bank's World Tables,
various years).
2
Data are taken from national accounts, so that saving coincides (and is denned as) the sum of gross
domestic investment plus the balance-of-payments current account surplus. Planned or formerly planned
economies, the main oil producers and a few other countries widi data problems are generally excluded
from empirical studies.
3
The use of country data to establish the saving-growth nexus might raise a problem from the point
of view of traditional theory, since, given the possibility of foreign borrowing, it would seem that a certain
degree of independence of domestic accumulation from domestic savings could be assumed. According
to the IMF, however, the imperfections in the international capital market (which render the access to
credit particularly difficult for developing countries) and especially the fact that national authorities tend
to consider the current account balance as a policy objective, make domestic savings the main source of
domestic investment financing (see IMF, 1995, pp. 79-83). Levine and Renelt (1992) and Pack and
Page (1994) find a high correlation between the rate of growth of output and the gross investment share.
110 A. PALUMBO

of Japan), so that excluding them would render the correlation almost non-
significant (Carrol and Weil, 1994, p. 149). This suggests that the concomitant
presence of high growth rates and high saving shares might reflect a phenomenon
specific to these countries, rather than a general relationship.
In the second place, while it is true that some of the fastest-growing economies
during the 1960-1990 period (the Asian economies listed above) also show a greater
average saving share, it can be noted that in the initial period of faster growth in each
country, the saving share was not particularly high, nor did it show any abrupt
increase (see IMF, 1995, p. 72; Carrol and Weil, 1994, pp. 149 ff.). Rather, the
gross saving share seems to have begun to rise, gradually though steadily, only one
or two decades after the increase in the rate of output growth occurred (IMF, 1995,
p. 70). The case of Korea is particularly puzzling to the IMF. Starting in the
mid-1950s, this country has lately experienced, and is still experiencing, a period of
sustained economic growth, with average annual growth rates of real per capita
output between 5 and 6% over the whole period up to the 1990s. At the beginning
of the process, the gross saving share was extremely low by international standards
(less than 10%), and did not begin to increase until the late 1960s. Since then, it has
grown steadily, up to the current figure of above 30% (see IMF, 1995, p. 72; Carrol
and Weil, 1994, p. 149-150). Not only did the increase in growth rates initially
occur without any change in the gross saving share, but when the latter increased it
did not produce any positive effect on the rate of growth. Rather, in coincidence
with the great increase in the saving share, the average rate of growth slightly
declined from 6-1% in 1960-1974, to 5-3% in 1975-1987 (see Carrol and Weil,
1994, p. 149). A broadly similar pattern is observable in the other Asian countries
that have undergone a rapid industrial expansion in the same decades (see Carrol
and Weil, 1994, p. 150-151, for data on Japan, Singapore and Hong Kong, and
Maddison, 1992, p. 183, for Taiwan). Carrol and Weil (1994) also try to assess the
direction of causality between saving and growth by means of a Granger causality
test, on the basis of five-year averages of the gross saving share and the rate of
growth of real per capita GDP.1 This exercise produces two results which the
authors find rather surprising: (i) that higher growth rates cause higher saving shares,
thus confirming what can be seen through the observation of historical series; and
(ii) that 'if there is any causality running from saving to growth, it is with a negative
sign' (p. 147). It may be noted that this latter result seems quite difficult to reconcile
with traditional growth theory, though, from the point of view maintained in the
present notes, it appears hardly surprising.
To sum up, evidence suggests that the episodes of rapid growth that Japan and the
industrialising Asian economies have lately experienced, have neither been caused,
nor been accompanied, at least at their start, by any increase in the share of gross
saving in output.
1
The period 1958-1987 is divided in subperiods of 5 years each, so that six time observations are
considered for each country. See p. 137 for the results of the panel regressions and pp. 145-149 for the
description of the Granger causality test.
 NOTES ON INVESTMENT, SAVTNG AND GROWTH 111

In the third place, it must be noted that a very similar result can be reached if one
looks at other historical experiences of economic growth. Both the near constancy of
the share of gross saving in the initial period of faster growth, and a tendency of this
share to rise only as a consequence of the growth process, have been observed for
Britain during the course of the Industrial Revolution (see Deane and Cole, 1962;
Crouzet, 1972; Crafts, 1983). The gross investment share remained almost
constant in the last decades of the 18th century and the first decades of the
19th century, and rose remarkably only from the 1830s on (the conventional date
for the beginning of the Industrial Revolution is between 1760 and 1780). For the
European countries which imitated Britain's industrialisation pattern, Habakkuk
(1955, p. 161-162) notes that, contrary to theoretical expectation, there was no rise
in the saving share at the beginning of the growth process. Similarly, according to
Cairncross (1963), the Swedish economy witnessed a tendency for the gross
investment share to rise only during the 20th century, although 'industrialization
was already in full swing and production rising rapidly long before 1900', and in
Norway, too, the rise in the saving share followed rather than preceded the take-off
(p. 249).
Thus, in all these historical instances the saving share in output stayed remarkably
constant notwithstanding the increase in growth rates of total and per capita output.
As remarked above, it seems implausible to interpret those episodes of fast growth
as entirely due to an increase in the rate of growth of labour productivity induced by
technical progress, with no change in the level of investment. A common feature of
those episodes of growth is the fact that the higher growth rates went together with
such things as the creation of a factory system, a massive shift towards modern
sectors of production, a relevant increase in the absolute level of employment and
especially of manufacturing employment: all phenomena that seem to necessarily
involve a great effort towards capital accumulation. Thus, the data seem to suggest
that a relevant increase in the level of investment may go together with the relative
constancy of the saving share — a result which appears to be quite at variance with
the predictions of traditional theory.

Ill

It remains to be explained the phenomenon of the relevant, if slow, increase in the

gross saving share that has occurred in all the above-mentioned experiences of
growth and that seems to indicate that economic growth may have a delayed,
positive effect on saving.1
1
The long-run nature of the empirical data under discussion rules out the possibility that the observed
changes in the saving share represent the effect of the different phases of the trade cycle, i.e. the effect
by which during recessions the saving share decreases both because of the tendency of private
consumption to contract less quickly and less dramatically than income, and because of the tendency of
public expenditure to rise (in the form of transfers to households) while tax revenue decreases.
112 A. PALUMBO

Two things are worth noting in looking for an explanation. In the first place this
effect, far from being a general and necessary relationship between growth and
saving, seems to occur only in some cases; in the quoted examples, in fact, it is
observable as a consequence of the process of industrialisation, while there is no
evidence that an acceleration in growth rates produces an increase in the saving
share in any circumstance. In the second place, the magnitude of the gross saving
share seems to depend more on the level of development that the economy has
attained than on the rate of growth as such. This is suggested by the fact that,
over long periods, the gross saving share seems to have followed a broadly similar
pattern in different countries, showing a tendency to increase in consequence of
development, then to stabilise, and then to slightly decrease.1
One possibility is to assume that the phase of development affects the cultural and
social determinants of the community's propensity to save. In this respect, it is
worth noting that it may be misleading to interpret the observed (ex-post) share of
gross private savings in GDP as representing the ex-ante propensity to save, this
latter being conceived as a sort of 'psychological' propensity of individuals and
households to postpone current consumption. Social arrangements and institutions,
such as the distribution of income among classes, the characteristics of the social
security system, the working of the credit market, and so on,2 are likely to be at least
as important as psychology in determining the average private propensity to save.
And, on the other hand, the decisions to save would probably be better represented
by the share of net income devoted to net savings, rather than by gross variables. It
is well-known diat data on net savings (and investment) are either extremely
unreliable or do not exist at all.3 Using the gross saving share as an approximation
of the propensity to save means that variations in the ratio between net and gross
income can affect the observed variable quite independently of changes in the desire
to save.
It is probably in these very variations in the ratio between net and gross output
that one cause of the relevant increase in the share of gross savings in output may
be found. In the course of the development process, in fact, and especially when an
economy passes from a backward to a more modern industrial structure, the average
requirements of fixed capital per unit of product are likely to increase (due to the
different and more complex techniques that are used in manufacturing industry in
comparison with agriculture, for example). This would enhance the amount of

1
See the long historical series on saving shares elaborated by Maddison (1992, esp. pp. 182-183). The
exception to the general pattern is constituted by the United States, where the gross saving share has
remained virtually constant from the 1870s.
2
Balassa and Noland (1989), referring particularly to the case of Japan, argue that the community's
propensity to save may also be affected by such things as the conditions of the housing market: where the
prices of houses are relatively higher and access to credit more difficult, households might be induced to
increase their share of saving out of income in order to be able to buy a house.
3
On the difficulties of estimating net saving, see for example Maddison (1992, p. 184).
 NOTES ON INVESTMENT, SAVING AND GROWTH 113

replacement investment per unit of product, thereby producing an increase in the

average ratio between gross investment an gross output.1
An effect of this kind seems capable not only of explaining why each country
going through a process of industrialisation experiences a marked increase in the
gross investment share, but also of providing a clue to other observable facts. It
would explain, for example, why more developed economies show a lower gross
saving share than the newly industrialised countries, given the weight that services
have assumed in the former, and the fact that services are likely to require much less
fixed capital per unit of product than industrial productions. It would also explain
why Japan, among industrial countries, shows the highest saving share, again
because 'J a P a n lags behind all other major industrial countries in terms of the share
of services in GDP' (Balassa and Noland, 1989, p. 15); and why this share has been
slightly declining since the 1980s, as a consequence of the slow change in the
composition of Japanese global production in favour of 'light' industry. It would also
explain the high and significant correlation that can be established, on the basis of
cross-country data, between the share of gross investment and the share of exports
in GDP, given that a high export share is normally related to a high share of
manufacturing in total production.2 In other words, it seems capable of accounting
for most of the empirically observed phenomena regarding the trend of investment
and saving shares.3
As regards the cultural and social factors affecting the propensity to save, they
may well change as an effect of economic growth, especially the kind of growth that
goes together with industrialisation, which involves a profound change in the
economic and social structure. But these influences are uncertain in intensity and
direction, so that it would be unwarranted to assume that they are sufficient to
explain empirical data.
It thus appears that what empirical evidence shows, in reality, is not a causal
relationship between gross saving share and rate of growth of output. Rather, it
shows a temporal coincidence between high growth rates and high saving, with both
phenomena depending on a third, such as a phase of intense industrial develop-
ment. This is likely to produce both a period of sustained growth rates (for the
transfer of great numbers of workers from low-productivity backward sectors to
high-productivity modern ones), and an increase in the gross saving share, due to
the increase in the fixed capital coefficient. But this temporal coincidence cannot be
taken to represent a causal relationship between the two variables, and this would
1
The increase in the ratio between gross investment (and saving) and gross output could occur in
practice through an increase in retained profits and allowance funds; i.e., more generally, through an
increase in non-distributed product as a share of total product.
2
See Balassa and Noland (1989, p. 15), and Levine and Renelt (1992, p. 955).
3
The proposed explanation seems also compatible with empirical results on the relation between the
saving share and the level of per capita output, according to which the saving share is higher for
middle-income countries (see IMF, 1995, p. 70). This reflects the difference in per capita income levels
between the fast-growing Asian countries and the more developed ones. See also Pack and Page (1994,
p. 209), for similar evidence.
114 A. PALUMBO

explain why the positive effect of growth on gross saving seems to occur in some
instances without being a regularly predictable empirical phenomenon.

IV
The main point of these notes has been to show that empirical observations not only
do not confirm, but on the whole contradict, both the idea that high saving has a
favourable effect on growth, and the idea that phases of fast growth are generally
induced or accompanied by a marked increase in the saving share. If the saving
share rises at all, this generally occurs well after a process of growth has begun, and
can be explained as an effect of the greater weight that fixed capital assumes in an
industrialising economy.
Some consequences can be drawn from these results. As mentioned above, the
IMF sees evidence of a tendency to a saving shortage in the world economy. This
tendency is supposed to be revealed both in the reduction in the world saving rate
in the 1980s compared with the 1960s (the reduction is of the order of about 2
percentage points)l and in the coincident increased level of interest rates, which is
regarded as an index of capital scarcity (IMF, 1995, p. 83-86). However, the
preceding analysis has shown that there is no foundation, either theoretical or
empirical, for the idea that investment and growth are constrained by the availability
of saving. The data can be interpreted as expressing a strict correlation between high
interest rates and growing public deficits, where the latter are likely to be more an
effect than a cause of the former (the high interest rates could in turn be determined
by such things as monetary policies or international exchange rate agreements, etc.).
At the same time, if the preceding analysis is correct, the policy conclusions of the
IMF, whereby 'in order to increase the pace of economic growth, countries need to
think first about boosting their saving in order to spur capital formation' (p. 70),
would be unwarranted. While there is no reason to assume that the policy of
encouraging saving would produce a positive effect on capital accumulation,
compressing consumption and demand would, if anything, have a negative instead
of a positive effect on the growth prospects of a country.

REFERENCES
AGHEVLI, B. B., BOUGHTON, J. M, MONTIEL, P. J., VILLANUEVA, D. and WOGLOM, G. (1990).
The Role of National Saving in the World Economy, Washington, D.C., International
Monetary Fund, Occasional Paper no. 67, March.
BALASSA, B. and NOLAND, M. (1988). Japan in the World Economy, Washington, D.C.,
Institute for International Economics.
1
The world saving share is calculated as a weighted average of national saving rates, where the weights
are determined on a purchasing power parity basis. As already noted, the trend in saving rates is very
different for different groups of countries. What seems to have a strong influence on the perceived decline
in saving rates is the great weight of major industrial countries in world data, and the fact that in these
countries, on average, public dissaving tended to rise remarkably in the 1980s (while no marked tendency
is observable in private saving rates). See IMF (1995, p. 8 and 68).
 NOTES ON INVESTMENT, SAVING AND GROWTH 115

CAIRNCROSS,A. (1963). Capital formation in the take-off, in The Economics of Take-off into
Sustained Growth, edited by W. W. ROSTOW, London & Basingstoke, Macmillan.
CARROL, C. D. and WEIL, D. N. (1994). Saving and growth: a reinterpretation, Carnegie-
Rochester Conference Series on Public Policy, 40, pp. 133-192.
CICCONE, R. (1986). Accumulation and capacity utilization: some critical considerations on
Joan Robinson's theory of distribution, Political Economy, Vol. II 1, pp. 17-36.
CRAFTS, N. F. R. (1983). British Economic Growth 1700-1831: a review of the evidence,
Economic History Review, second series, XXXVI, 2, pp. 177-199.
CROUZET, F. (ed.). (1972). Capital formation in the Industrial Revolution, London, Methuen &
Co. Ltd.
DEANE, P. and COLE, W. A. (1962). British Economic Growth 1688-1959, Cambridge,
Cambridge University Press.
GAREGNANI, P. (1992). Some notes for an analysis of accumulation, in Beyond the Steady-
State, edited by J. HALEVI, D. LAIBMAN and E. J. NELL, Basingstoke & London,
Macmillan.
GERSOVITZ, P. (1988). Saving and development, in Handbook of Development Economics,
Vol. I, edited by H. CHENERY and T. N. SRINTVASAN, Amsterdam, North Holland.
HABAKKUK, H. J. (1955). The historical experience on the basic conditions of economic
progress, in Economic Progress, edited by L. H. DUPRIEZ, Louvain, Institut de recherches
economiques et sociales.
IMF (1995). World Economic Outlook, Washington, D.C., International Monetary Fund,
May.
IMF (1991). World Economic Outlook, Washington, D.C., International Monetary Fund,
May.
KURZ, H. (1986). 'Normal positions and capital utilization, Political Economy, vol. II, no. 1,
pp. 37-54.
LEVINE, R. and RENELT, D. (1982). A sensitivity analysis of cross-country growth regressions,
American Economic Review, LXXXII, 4, pp. 942-963.
MADDISON, A. (1992). A long-run perspective on saving, Scandinavian Journal of Economics,
XCTV, 2, pp. 181-196.
PACK, H. and PAGE, J. M. Jr. (1994). Accumulation, exports and growth in the high-
performing Asian economies, Carnegie-Rochester Conference Series on Public Policy, 40,
pp. 199-236.
SOLOW, R. (1956). A contribution to the theory of economic growth, Quarterly Journal of
Economics, LXX, pp. 65-94.
WORLD BANK (1984). World Development Report, New York, Oxford University Press for the
World Bank.
WORLD BANK (1989). World Development Report, New York, Oxford University Press for the
World Bank.