Hevia, ConstantinoLoayza, Norman2012-03-192012-03-192011-01-01https://hdl.handle.net/10986/3302This study illustrates the mechanisms linking national saving and economic growth, with the purpose of understanding the possibilities and limits of a saving-based growth agenda in the context of the Egyptian economy. This is done through a simple theoretical model, calibrated to fit the Egyptian economy, and simulated to explore different potential scenarios. The main conclusion is that if the Egyptian economy does not experience progress in productivity -- stemming from technological innovation, improved public management, and private-sector reforms -- then a high rate of economic growth is not feasible at current rates of national saving and would require a saving effort that is highly unrealistic. For instance, financing a constant 4 percent growth rate of gross domestic product per capita with no improvement in total factor productivity would require a national saving rate of around 50 percent in the first decade and 80 percent in 25 years. However, if productivity rises, sustaining and improving high rates of economic growth becomes viable. Following the previous example, a 2 percent growth rate of total factor productivity would allow a 4 percent growth rate of gross domestic product per capita with national saving rate in the realistic range of 20-25 percent of gross domestic product.CC BY 3.0 IGOANNUAL DEPRECIATION RATEANNUAL GROWTHANNUAL GROWTH RATEAVERAGE GROWTHAVERAGE GROWTH RATEBENCHMARKBORROWERBORROWINGCAPITAL ACCUMULATIONCAPITAL INVESTMENTCAPITAL MARKETSCAPITAL RETURNSCAPITAL STOCKCONSTANT RATECONTRACT ENFORCEMENTCURRENT ACCOUNTDEBTDEMOGRAPHICDEPRECIATION RATE OF CAPITALDEVELOPED COUNTRIESDEVELOPING COUNTRIESDEVELOPMENT ECONOMICSDEVELOPMENT POLICYDEVELOPMENT RESEARCHDEVELOPMENT STRATEGYDIMINISHING RETURNSDISPOSABLE INCOMEDOMESTIC SAVINGEARNINGSECONOMIC GROWTHEDUCATIONAL ATTAINMENTEMERGING MARKETEMERGING MARKET ECONOMIESEMPLOYEEEXPENDITURESEXTERNAL FINANCINGFACTOR ACCUMULATIONFACTORS OF PRODUCTIONFINANCIAL CRISISFINANCIAL INSTITUTIONSFINANCIAL INSTRUMENTSFINANCIAL INTERMEDIATIONFINANCIAL MARKETSFINANCIAL SYSTEMFIRM PERFORMANCEFOREIGN CAPITALFOREIGN DEBTFOREIGN INVESTORSGDPGDP PER CAPITAGROSS DOMESTIC PRODUCTGROSS DOMESTIC PRODUCT PER CAPITAGROWTH EQUATIONGROWTH MODELSGROWTH PERFORMANCEGROWTH RATEGROWTH RATE OF OUTPUTGROWTH RATESGROWTH THEORYHOUSEHOLDSHUMAN CAPITALINCREASED INVESTMENTINEQUALITYINFRASTRUCTURE INVESTMENTINSTITUTIONAL REFORMINTEREST RATEINTERNATIONAL BANKINTERNATIONAL CAPITALINTERNATIONAL CAPITAL MARKETSINTERNATIONAL FINANCIAL MARKETSINVENTORYINVESTMENT CLIMATEINVESTMENT OPPORTUNITIESINVESTMENT RATELABOR FORCELABOR INPUTLABOR MARKETLEVEL OF CAPITALLONG RUNMACROECONOMIC ANALYSISMACROECONOMIC STABILITYMACROECONOMICSMARGINAL PRODUCTIVITYMARGINAL RETURNSMARKET ECONOMIESMEDIUM TERMMONETARY POLICYMULTINATIONALNATIONAL ACCOUNTSNATIONAL INCOMENET EXPORTSNEW BUSINESSOPEN ECONOMIESOPEN ECONOMYOUTPUT GROWTHOWNERSHIP STRUCTUREPER CAPITA GROWTHPHYSICAL CAPITALPOLICY IMPLICATIONSPOLICY MAKERSPOLICY MEASURESPOLICY OPTIONSPOLICY RESEARCHPOLITICAL ECONOMYPORTFOLIOPRIVATE SAVINGSPRIVATIZATIONPRODUCTION FUNCTIONPRODUCTION PROCESSPRODUCTIVITY GROWTHPRODUCTIVITY OF CAPITALPROFITABILITYPUBLIC EXPENDITURESPUBLIC INFRASTRUCTUREPUBLIC INVESTMENTRATE OF GROWTHRATE OF RETURNRELATIVE CONTRIBUTIONREMITTANCESRISK PREMIUMSAVING RATESAVINGSSECTOR REFORMSSHARE OF OUTPUTSOLVENCYSOURCES OF FUNDSTAXTAX BURDENTAX CODETECHNOLOGICAL INNOVATIONTFPTOTAL FACTOR PRODUCTIVITYTOTAL OUTPUTVALUATIONVALUE OF OUTPUTWorld Bank10.1596/1813-9450-5529