Rakesh Mohan: Innovation and growth - role of the financial sector
Text of the Bharti Annual Lecture by Dr Rakesh Mohan, Deputy Governor of the Reserve
Bank of India, at a function organised by Entrepreneurship Development Institute of India,
Ahmedabad, 28 March 2008.
Assistance of K. Kanagasabapaty, Partha Ray and Muneesh Kapur in preparing the speech is gratefully
acknowledged.
* * *
"Accelerating productivity growth entails a matching acceleration in the
potential output of goods and services and a corresponding rise in the real
incomes available to purchase the new output. The problem is that the
pickup in productivity tends to create even greater increases in aggregate
demand than potential aggregate supply" - Alan Greenspan
"Whatever the supply side may have in store, delivering low and stable
inflation - and being expected to do so - is how monetary policy can give
sustainable growth its best chance" - John Vickers
I am deeply honoured to be invited to deliver the Bharti Annual Lecture at the
Entrepreneurship Development Institute of India. I thought that since I am speaking at this
cradle of entrepreneurship it would be most appropriate for me to speak on "Innovation and
Growth". Being in the central bank of the country, however, I should perhaps also focus on
the role of the financial sector in fostering such innovation and growth. But you may still ask,
what can a central banker say about innovation and entrepreneurship, since we are, by
profession, supposed to be staid, boring and non-adventurous: among our key tasks is to
provide financial stability.
As it happens, the subject of innovation and growth is very central to the concern of central
banks. A key concern, in fact, the primary objective, of monetary authorities is to achieve low
and stable inflation. A necessary ingredient for achievement of low inflation is the
acceleration of productivity growth in an environment of high economic growth. When growth
in productivity is high, a sustained increase in income, leading to sustained growth in
demand can be managed with low inflation. So the quest for increasing productivity is of
great interest to central bankers, and it is entrepreneurship and innovation that leads to
productivity growth.
If I may add a personal note, I have had a long standing academic interest in the promotion
of research and development, and hence of productivity. In fact, my first academic papers
were on the measurement of productivity of research and extension in agriculture. Somewhat
more recently, I also worked on European industrial and technology policy at the United
Nations Institute for New Technologies in Maastricht in the mid 1990s. So I am very pleased
to get this opportunity today to speak on innovation and growth in India.
In view of the sharp acceleration in India's economic growth and the keen interest in its
potential growth, in my talk today, I will, first, provide a brief overview of India's long-term
growth performance. I will then attempt to set out the conditions for successful innovations.
To assess the role of innovations in the Indian economy, I will document the estimated
contributions of productivity gains to real GDP growth. I then focus on the role of financial
sector reforms in contributing to innovation and growth. Finally, I will conclude by outlining
the role of monetary policy in sustaining growth and innovations by ensuring price and
financial stability.
India's growth experience: an overview
We are now passing through a period of remarkable change and very interesting times. For
half a century before independence in 1947, there was hardly any discernible economic
growth in the whole Indian sub-continent. We have come a long way from the growth of 3-3.5
per cent growth in 1950s, to around 5.5 per cent in 1980s, 5.8 per cent in 1990s, and most
recently to a sustainable growth path of around 8.5 per cent plus (Table 1). But, what is even
more striking is the fact that if we take into account the decline in the rate of population
growth from 2.2 per cent for 40 years during 1960-90 to 1.8 per cent in the 1990s and further
down to 1.6 per cent currently, the growth in per capita GDP has seen a tremendous push
from around 1.6 per cent a year in the 1950s to around 7 per cent per year now.
Table 1: Growth and Inflation in India - A Historical Record
(Per cent)
Period (Averages) GDP Growth Rate WPI Inflation Rate GDP Growth Per
Capita
1 2 3
1951-52 to 1959-60 3.6 1.2 1.6
1960-61 to 1969-70 4.0 6.4 1.7
1970-71 to 1979-80 2.9 9.0 0.6
1980-81 to 1990-91 5.6 8.2 3.3
1992-93 to 1999-00 6.3 7.2 4.2
2000-01 to 2006-07 6.9 5.1 5.3
2003-04 to 2006-07 8.6 4.9 7.1
Source: Reddy (2007).
With such a high rate of economic growth that we have now experienced in recent years,
progress in the country is now very palpable. The growth is manifesting itself in many ways
all across the country: innovation and entrepreneurship are in the air. Exciting changes are
taking place in all spheres. Even in agriculture, which otherwise has exhibited low growth
over the past decade, a great deal of innovation is taking place. You only need to look at the
documentation done by the National Innovation Foundation, anchored at your neighbouring
institution the Indian Institute of Management in Ahmedabad. Changes in public policy over
the past couple of decades have indeed freed the entrepreneurial spirit of India. Our job as
macroeconomic managers is to provide the overall environment for such entrepreneurship,
innovation and growth to flourish.
What constitutes such an environment? Low and stable inflation is essential: high and
uneven inflation enhances risk and is hence inimical to innovation and risk taking. Investment
cannot take place without the availability of risk capital, buttressed by the availability of an
adequate flow of credit to nurture the investment climate. Furthermore, the cost of money
available must reflect appropriately the risk and opportunity cost of lending. Underpricing of
risk can lead to excessive risk taking, and overpricing would lead to the converse. For people
to take risk, to innovate and grow, to have confidence in the future, the environment of low
and stable inflation has to be supported by the maintenance of overall financial stability.
Finally, it is the existence of sound financial institutions that is necessary for the appropriate
supply of financial resources to take place. It is the job of the central bank and other
regulatory institutions to ensure the existence of such an overall financial environment.
The whole process of economic reforms, capital market forms, financial market reforms,
banking reforms, and monetary policy reforms have all combined to provide such an
environment. We need to ensure that this kind of growth environment - low and stable
inflation and financial stability - is indeed maintained and sustained in the medium to
longterm, so that in India entrepreneurship can flower and flourish further.
Conditions for innovation and growth
The foremost economic thinker who talked about innovation was Joseph Schumpeter. He
defined it to encompass any of a number of different features. The introduction of a new
method of production would naturally embody some innovation. Indian industry has clearly
embraced a host of new methods of production in recent years. Second, the opening of new
markets also needs innovation in marketing approaches and techniques. The data collected
in the Market Information Surveys of Households (MISH) by the National Council of Applied
Economic Research (NCAER) amply demonstrate how new markets have been developed in
the country, right since late 1980s. Third, the use of new sources of supply of raw materials
also involves innovation. With trade liberalization, industry now has access to all raw
materials and goods available in the world, so a great deal of innovation has been taking
place in their procurement and use. A fourth possibility is innovation in new forms of
industrial organization. With overall change taking place in the economic environment, we
are also witnessing new forms of industrial organization on a regular basis. Thus, from all
these four points of view, the pace of innovation has been very healthy in India since the
early 1990s.
The National Knowledge Commission (2007) in its recent report titled "Innovation in India"
has defined innovation in a similar fashion:
"as a process by which varying degrees of measurable value enhancement
is planned and achieved, in any commercial activity. This process may be
breakthrough or incremental, and it may occur systematically in a company
or sporadically; it may be achieved by:
- introducing new or improved goods or services and/or
- implementing new or improved operational processes and/or
- implementing new or improved organizational/ managerial processes
in order to improve market share, competitiveness and quality, while reducing costs."
Besides Schumpeter, there are others who have talked about different types of innovation
such as business model innovation, marketing innovation, improvement in product design
and in product pricing. Here again, we can observe a bucket-full of innovation in the country.
In terms of organizational innovation, Indian business organizations have ventured into all
kinds of new kinds of business models - be it the introduction of flat organizations, lean
organizations, or pyramidal organizations - and things keep on changing according to the
changing business environment. New business practices are also being introduced: for
example, the practice of 360 degree evaluation within companies is a new concept and
perhaps alien to a hierarchical society. Another type of innovation is process innovation. The
Indian pharmaceutical industry is known for its great degree of process innovation in drugs.
Yet another area is product and service innovation in terms of new goods and services for
which Indian examples can be many. As regards supply chain innovation, the best example
comes from the rural sector particularly the agriculture sector, but which is still in its infancy
in India.
All these innovations take place when there is some need. The old saying that "necessity is
the mother of all invention" is clearly true. What has spurred the acceleration of invention in
India is the overall economic reform process. For example, delicensing of industry in 1991
ushered in a new era of competition; which was then reinforced by continuing trade
liberalization and tariff reform throughout the decade. Furthermore the freeing of foreign
direct investment (FDI) not only provided new competition, but also brought new techniques
and technology into the country. Thus, Indian industry was forced to innovate in all the
different ways mentioned to cope with the new competition.
All the innovations in the real sector needed corresponding innovations in the financial sector
as well. Innovations in products and services in the real sector therefore, move ideally in
parallel with innovations in the financial sector. Furthermore, strong public policies and good
governance structures nurture these two developments and direct them in a non-disruptive
and constructive manner so that the positive growth process can be sustained. Financial
innovation involves development of new financial services and products. And these new
products and services need to be more easily accessible. So, financial firms have to innovate
to broaden access to their services. Greater financial inclusion is a must. The spread of
micro finance is one method by which financial inclusion is being sought to be achieved.
Innovation involves risk. If risk is to be financed effectively, it is essential for financial
institutions to improve their risk management systems in their entirety. First is the need to
develop appropriate risk assessment systems. Here the proposed introduction of credit
information bureaus should help greatly in the future. Second is the development of risk
mitigation systems. Third, appropriate risk allocation mechanisms have to be developed, so
that risk is adequately distributed from the point of view of the financial institutions. As
financial systems become more market oriented and as price discovery of interest rates
becomes more efficient, financial institutions find better and better ways of managing and
allocating risk. Effective development of financial systems to finance innovation takes a good
deal of time.
Innovations can either be supply induced or demand led. Supply led innovations arise from
new research and development activities that give rise to new technologies, new products,
and new processes. Demand led innovation essentially arises from the pressures of new
competition. And, of course, R & D itself can be demand induced.
For innovation to take place on a continuous and efficient basis in response to the pressures
felt there is a need for an effective national innovation system. Apart from the structuring of in
house mechanisms within firms, there is need for the existence of mutually supporting
networks of organizations that nurture the culture of research development and innovation.
R&D institutions have to be supported by standard setting organizations, technical
consultancies and the like so that firms have adequate technical support systems. Clusters
and incubators are also needed for creating such supportive environments for small and
medium firms.
But innovation also comes embedded in both labour and capital. As investment picks up,
new machines are installed that have newer technology embedded in them. For the same
price the new machine does much more than the old one. The revolution in machine tools
with embedded new information technology over the last 20 years is a case in point. Another
example could be what is happening to cell phone technology with multi-tasks, at lower
prices. A great deal of work can now be accomplished on the cell phone even when people
are travelling. Thus, a great deal of innovation gets embedded in new capital, and all these
changes enhance efficiency and productivity. Similarly, on the human capital side, newly
trained manpower comes with newer skills. They do the same jobs much faster than the less
trained older labour force. As organisations renew their labour force or impart training to their
existing workers they are likely to increase their pace of innovation and productivity growth.
All such developments that promote innovation and productivity growth are of the utmost
interest to central banks.
While it is interesting to note that productivity appears to have picked up worldwide over the
last decade or so and new investments could have been the source of its acceleration, the
implications of such positive shocks for sustained growth need to be understood. The rapid
replacement of new technology means that the technological progress gets embedded in the
accumulation of fresh capital stock at a faster rate than would otherwise be the case.
Second, recent research shows that new technology is quite sensitive to movements in the
cost of capital. A combination of high price elasticity and the declining price of high-tech
equipment also contributes to an investment boom. Third, these investments have
considerable externalities or spill over effects. The application of new technology has helped
to reduce operating expenses and as a result of higher productivity there has been
considerable stability in labour costs. Globalisation in terms of outsourcing combined with the
availability of new skilled labour in China and India has also contributed to low inflation
worldwide. Combined with the impact of competition in exercising pricing leverage, these
developments have helped significantly in containing inflationary pressures during the
expansion phase of global GDP over the past decade.
In this process, the law of supply creating its own demand also operates. First, productivity
increases result in a higher potential for growth and this in turn generates further demand for
goods and services. The real rate of return on new investments increases and capital
spending accelerates to take advantage of the profit opportunities. Employment and income
generated help to augment consumer demand as well. The spurt in capital market valuations
could be a reflection of such higher profitability. The wealth effect of such a capital market
spurt could further accelerate both consumer and investment demand.
Higher the growth in productivity, higher is the overall growth at given levels of investment
and that also means that much higher growth can be sustained by higher investments
without arousing inflationary pressures. The best thing thus one can do is to encourage
innovation, productivity and growth which can then bring about better control over inflation.
This is exactly what has happened in the world in the last 10 years. Central banks around the
world congratulate themselves for having been very successful especially in the last 10 to 15
years for having tamed inflation internationally. But, what lies behind that achievement
through monetary policy is also the gains that have come through increases in productivity.
The productivity boom in the US has contributed immensely to non-inflationary growth in the
US and also globally in the last decade. What is important from the central bankers' point of
view is that this inflation moderation has taken place in the presence of considerable
monetary accommodation over the same period. In the US, most of the 1995-2000
productivity growth acceleration can be attributed to investments in technology and
management know-how needed to exploit it (Oliner, Sichel and Stiroh).
Thus, encouraging innovative activity through investments in R&D activity is something that
is central to the concern of central banks. Innovation and productivity growth contribute to the
attainment of low and stable inflation, and low and stable inflation, in turn, provides an
appropriate environment for innovation.
Whereas innovation is characteristically done within firms or in R&D organisation, for such
activity to flourish, it is essential that there is both macroeconomic and financial stability.
In sum, we need a conducive macroeconomic environment for innovation and growth, a
supportive financial system and an innovation nurturing environment through national
innovation systems.
There are now some signs that inflation could be again increasing worldwide. Commodity
prices, particularly of food and oil, have been increasing in particular. Similarly there are
indications that global growth could be slowing down at the same time, particularly in the
United States. Is this happening because innovation and productivity growth is slowing down
in the US? Similar tendencies are evident in the UK. So, the outlook for productivity growth is
crucial in the global context and of great concern to central bankers.
India's growth experience: trends in innovation and productivity
I have earlier sketched India's broad growth path since independence. When growth was low
in the 1950s, 1960s, and particularly in the 1970s, there was little innovation. Now that the
growth is much higher there is also the appearance of much more innovation all round. What
is the evidence that this is actually happening? Unlike the upsurge in growth in the mid
1990s, the growth this time around has been much more broad-based, driven by robust
contributions from both manufacturing and services. And, most importantly, unlike in the past
an important ingredient of this growth momentum has been improvements in factor
productivity.
Whereas it is difficult to obtain a comprehensive picture of the spread of innovation in the
country, occasional surveys provide good evidence on the increasing importance that is
being placed by firms on innovation. There are also some macro estimates available on the
extent of productivity growth and efficiency in capital use in the Indian economy. I present
these in turn.
The National Knowledge Commission carried out a survey of a wide variety of firms to
understand the nature of innovations, the differences between firms across sectors, and the
role played by innovations in driving growth in India. The survey covered a total of 137 firms
- 58 large firms and 79 small and medium enterprises (SMEs). The survey results suggest
that innovation is clearly in the air in the Indian business environment.
The survey found that innovation gained in importance in the decision making processes of
firms - both large and small. Firms find that an increasing proportion of their growth in
revenue, profitability, reduction in costs and increase in market share can be attributed to
innovations. Thus investing in innovation is being seen as a necessity for business success.
Most innovation is incremental, though breakthrough innovations can bring a more dramatic
jump in sales, profitability and the like. As might be expected, it is large firms that can hope to
do breakthrough innovations, while small firms typically do incremental innovations.
Consistent with our earlier classification of what constitutes innovation, the survey finds that
innovations are well spread across new products, new methods of production, marketing,
innovative use of raw materials, and the like. Interestingly, although the intensity of
innovation is found to be higher in manufacturing firms, the pace of growth in innovation
intensity is higher in service sector firms. Service firms are, furthermore, more likely to be
"highly innovative".
As regards the process of innovation, firms that consciously invest in R&D, have better
contacts and collaboration with R&D institutions, universities and government laboratories
have a better chance of making innovation. Thus, there is great potential synergy between
public investment in knowledge generating institutions and private entrepreneurship. In fact,
some of the key barriers to innovation are the shortage of skills, dull educational curricula
and inadequate interaction with public agencies. Correspondingly, within firms, the attention
of top management to the importance of innovation is essential.
These survey results confirm the a priori view of rising innovation activity and awareness in
India and their growing importance in driving competitiveness and productivity gains in an
increasingly competitive economic environment. At the same time, as the results indicate,
there is a need to improve the skills of the workforce. The quality of education imparted in
several colleges and universities in the country remains less than adequate to meet the
emerging demands for skilled professionals. Substantial expansion and reforms in the
education sector would be needed on an urgent basis. Education facilities would need to be
extended at all levels, viz., primary, secondary and at a tertiary level.
Macro evidence
The survey-based evidence of growing recognition of innovation as well as its importance in
production, presented above, is also supported by macro evidence in terms of economy-wide
growth decomposition exercises. There is evidence that the step-up in Indian growth in the
post-1993 period has been led by improvements in factor productivity. Bosworth and Collins
(2007) who study the period 1978-2004 find a pick-up in productivity growth in the latter part
of their sample (Table 2). Annual real GDP growth rose by 2 percentage points between the
period 1978-1993 and the period 1993-2004; according to estimates by Bosworth and Collins
(op cit), this pick-up was almost evenly divided between higher capital deepening and
productivity growth. The sample period covered by Bosworth and Collins (op cit) ends in the
year 2003-04, whereas the acceleration in real GDP growth has occurred in the subsequent
years. The same period has also exhibited a surge in domestic savings and investment. With
the step up in growth since 2003-04, it will be interesting to study the growth accounting
analysis for the period since 2003-04 onwards to find out the comparative contributions of
capital deepening and productivity to the acceleration in real GDP growth: but for this we will
now have to wait for a few years.
Table 2: Sources of Growth: India, China and East Asia 1978-2004
Growth (per cent per annum) Contribution to growth (percentage
points)
Period Country Output Output/ Physical Factor
/Region Employment worker capital Education productivity
1 2 3 4 5 6 7 8
1978-2004 China 9.3 2.0 7.3 3.2 0.2 3.8
India 5.4 2.0 3.3 1.3 0.4 1.6
1978-1993 China 8.9 2.5 6.4 2.5 0.2 3.6
India 4.5 2.1 2.4 1.0 0.3 1.1
1993-2004 China 9.7 1.2 8.5 4.2 0.2 4.0
India 6.5 1.9 4.6 1.8 0.4 2.3
1960-1980 East 7.0 3.0 4.0 2.2 0.5 1.2
1980-2003 Asia 6.1 2.4 3.7 2.2 0.5 0.9
1980-1993 (excl. 7.3 2.7 4.6 2.6 0.6 1.4
1993-2003 China) 4.5 2.0 2.5 1.8 0.5 0.3
Source: Bosworth and Collins (2007).
There has been a good deal of academic discussion on the nature of growth in East and
South East Asia, particularly in the aftermath of the financial crisis of 1997. One view to
emerge was that the high growth experienced by this region in the 1970s and 1980s was
based on extensive capital investment, and that there was little innovation and productivity
growth in these countries during that period. This is somewhat different from the more recent
growth experiences of China and India. Growth in both China and India has been
accompanied by significant productivity growth (Table 2). What is notable is that the growth
in capital investment has been very high in China, in contrast to that in India, while
employment growth has been comparable. We can also observe that the pace of productivity
growth picked up significantly in India in the 1990s, after the advent of economic reforms.
India has indeed been very economical in use of capital and therefore the growth in
productivity has been relatively high in India since the mid-1990s. The record of the rest of
Asia has not been as good with regard to productivity growth.
It is important to speculate on the reasons for such differences in performance. Definitive
answers are difficult to find and need much more careful research. However, it is probably
correct to say that the Indian financial sector has been less distorted than China and some of
the other Asian countries after the financial sector reforms of the early and mid 1990s. The
cost of capital became market related after the mid 1990s. Indian industry appears to have
responded well to these emerging market signals. Debt equity ratios came down after the
late 1990s when real and nominal interest rates rose. And productivity appears to have risen.
Capital seems to be used with much more care. So, financial sector reforms could have
played an important role in the increase in innovation and productivity in Indian industry in
recent years. Indian industry has clearly been working hard over the last decade, which is
also now evident in the attainment of very high profit growth over the last 5 years or so.
Despite the favourable features which have helped Indian industry to achieve a consistently
high growth in the recent years, the uncertainties about productivity trends pose a major
challenge in India. Latecomers to industrialisation can achieve considerable local innovation
and growth in productivity by adopting already available technology. As the level of
technology improves, greater R & D investment has to be made, both to adapt available
technology and to develop the new technology needed for innovation. Once the potential for
low hanging technology fruit is exhausted new investment has to be made or greater effort to
pluck the higher hanging fruit. Indian industry therefore has to become more conscious of the
need for continuing the rate of innovation achieved. It will need greater attention to
enhancing the level of human capital through training and higher education, higher rates of
capital investment, along with more research and development activities.
Turning to sectoral analysis of productivity growth for the Indian economy, estimates suggest
that productivity gains were recorded in both industry and in the services sectors in the
postreform period (Table 3). The gains were relatively modest in industry vis-a-vis the services
sector, which recorded a significant pick-up in productivity growth, which is consistent with
the sketchy micro evidence available. According to estimates by Bosworth and Collins (op
cit), productivity gains accounted for almost 70 per cent of the growth in output per worker of
the services sector during the period 1993-2004; over the same period, productivity gains
accounted for only a third of the growth in output per worker of the industrial sector. The
relatively lower order of contribution of productivity in the industrial sector could perhaps be
reflective of the slowdown in the sector over the latter part of the sample period.
Table 3: Sources of Growth in India: Sectoral Analysis, 1978-2004
Sector Growth (per cent per annum) Contribution to growth
(percentage points)
Period Output Output/ Physical Factor
Employment worker capital Education productivity
1 2 3 4 5 6 7 8
1978-2004 Overall 5.4 2.0 3.3 1.3 0.4 1.6
Agriculture 2.5 1.1 1.4 0.4 0.3 0.8
Industry 5.9 3.4 2.5 1.5 0.3 0.6
Services 7.2 3.8 3.5 0.6 0.4 2.4
1978-1993
Overall 4.5 2.1 2.4 1.0 0.3 1.1
Agriculture 2.7 1.4 1.3 0.2 0.2 1.0
Industry 5.4 3.3 2.1 1.4 0.4 0.3
Services 5.9 3.8 2.1 0.3 0.4 1.4
1993-2004 Overall 6.5 1.9 4.6 1.8 0.4 2.3
Agriculture 2.2 0.7 1.5 0.7 0.3 0.5
Industry 6.7 3.6 3.1 1.7 0.3 1.1
Services 9.1 3.7 5.4 1.1 0.4 3.9
Source: Bosworth and Collins (2007).
The significantly higher order of productivity growth in the services sector could be attributed
to the fact that the delivery of services has changed tremendously. The introduction of
information technology has changed the face of service delivery. Financial services are the
most obvious illustration of this revolution. In fact, it is difficult to imagine the delivery of
financial services without the use of information technology. Trading in capital markets is now
totally electronic, which has also helped greatly in expanding the access to capital markets
across the country. Now access to the capital market is, in principle, equalized regardless of
the person's physical location. The introduction of mobile banking has just begun: now that
there almost 300 million cell phones in the country we can expect a huge transformation in
the delivery of banking services as this technology takes root. Travel services are another
area where the use of information technology has changed the form of service delivery. Air,
train, bus and hotel bookings can be made from the comfort of the home without the use of
intermediaries. This has also resulted in great cost savings, hence an increase in
productivity. The delivery of government services is also beginning to take advantage of
information technology in a myriad of ways, from land titling to bill payments, information
dissemination and the like. Thus innovation is pervasive in our daily lives.
The efficiency in the use of resources in India, in a cross-country context, is also evident from
the movements in incremental capital output ratios of the overall economy. Analysis clearly
indicates that not only has there been a consistent upward trend in India's investment rate
since the 1950s, there is also evidence that capital has been employed productively. Barring
the decade of the 1970s, the incremental capital output ratio (ICOR) has hovered around 4.
There are some signs of improvement in domestic productivity in the post-reforms period,
consistent with the earlier evidence. Cross-country comparison indicates that ICOR has been
amongst the lowest in India. This is especially true of the period since the 1980s onwards
(Table 4). Various reform measures aimed at increasing the competitiveness appear to be
having the desired impact on the productivity of the Indian economy.
Table 4: Growth, Investment and ICOR - Select Countries
Country 1960s 1970s 1980s 1990s 2000-2006
1 2 3 4 5 6
Real GDP Growth (Per cent)
Brazil 5.9 8.5 3.0 1.7 3.1
China 3.0 7.4 9.8 10.0 9.5
India 4.0 2.9 5.6 5.7 7.0
Indonesia 3.7 7.8 6.4 4.8 4.9
Korea 8.3 8.3 7.7 6.3 5.2
Mexico 6.8 6.4 2.3 3.4 2.9
Philippines 5.1 5.8 2.0 2.8 4.8
South Africa 6.1 3.3 2.2 1.4 4.1
Thailand 7.8 7.5 7.3 5.3 5.0
Real Investment Rate (Per cent of GDP)
Brazil 15.3 18.1 16.4 16.9 15.8
China 23.7 35.9 37.4 40.1 41.4
India 16.9 19.4 20.2 23.3 28.1
Indonesia 8.9 17.9 29.6 33.1 22.7
Korea 12.8 21.0 27.4 35.6 29.4
Mexico 25.9 26.2 20.1 20.4 22.1
Philippines 19.9 23.3 21.6 22.9 20.7
South Africa 16.0 20.0 17.8 14.9 17.2
Thailand 26.8 31.5 30.2 36.4 22.6
ICOR
Brazil 2.6 2.1 5.5 9.9 5.1
China 7.9 4.8 3.8 4.0 4.3
In