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Critically comment on the following statement as it refers to middle-income developing countries "foreign savings complement...

Critically comment on the following statement as it refers to middle-income developing countries

"foreign savings complement domestic savings. so access to foreign savings allows developing countries to grow at a faster pace in the long run."

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Answer #1

Ans. Yes , there is indeed no doubt that Foreign savings ie Foreign capital inflows Complements the domestic savings and it inturn help the economy to grow in long run. On the other hand , savings can prove to be detrimental for the economy too if there is substantially less increase in the consumption in the economy. More consumption eventually leads to an increase in the GDP of the country. Hence , merely focusing on savings only would not really help the economy to grow at a faster pace in the long run , this should be complemented with increase in consumption expenditure too.

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