In a world where money flows easily across national borders, does savings still matter for growth?
Here's a simple and stupid experiment. Take the industrialized countries. If you knew which ones had a higher national savings rate in 1995, could you predict which ones would have better economic performance over the next ten years? Maybe not.
increase in real per capita GDP 1995-2005 Low savings countries 26.9% Medium savings countries 30.1% Medium savings countries (except Ireland)* 23.0% High savings countries 21.4%Not much benefit to being a big saver, is there?
Low savings countries (national savings rate less than 20% in 1995) are United Kingdom, United States, New Zealand,Iceland,Australia, Greece,Canada,and France.
Medium savings countries (national savings rate between 20% and 25% in 1995) are Denmark, Sweden, Ireland, Austria, Italy, Germany, Finland, and Spain.
High savings countries (national savings rate above 25% in 1995) are Belgium, Norway, Netherlands, Japan, Switzerland, and Korea.
*Ireland is an outlier in terms of its per capita GDP growth, so it may make more sense to omit it from the group.