thanks a lot. learnt a lot. by the way, could you explain more about the saving rate?
@caishishuo13 күн бұрын
You can refer to this video if you want a real life case: kzfaq.info/get/bejne/hZOaq9er0628o3U.html . But I will explain the theory in plain text here. First, GDP is composed of savings and consumption. Secondly, savings are equal to investment, because only when savings are high can there be more borrowing. This is actually stated from the perspective of the bank's balance sheet, that is, for a loan, there must be a savings. In other words, if investment needs to be increased, the savings rate must be increased. So how to increase the savings rate? The simplest way is to reduce the amount of GDP allocated to residents. GDP is equal to resident expenditure + government expenditure + investment + net exports at the same time, and only the first item needs to be reduced. Therefore, a slightly worse labor law and resident protection are needed for this purpose. In the early stages of industrialization, a higher savings rate, that is, higher investment, can bring better infrastructure to improve efficiency, which will directly improve the welfare of the entire society, even if residents are allocated less. However, in the late stages of industrialization, because infrastructure is inefficient, after all, dozens of highways may not necessarily improve transportation efficiency. At this time, more should be allocated to residents to increase consumption, otherwise overproduction will occur. These processes are easy to say, but very difficult to implement in practice. However, because India has a democratic parliamentary system, it should not have the soft budget constraint problem similar to China. The efficiency of social operation should be higher in the future.