Promotion of Economic Growth Over the longer run, the economic well-being of a nation depends on the growth of potential output or GDP per capita. Crucial to this growth is the fraction of a nation's resources devoted to capital formation. The ability to add to the capital stock through investment depends on a nation's saving rate. Saving comes from several sources. The former save when all of their after tax income is not used for consumption.
Businesses save through retained earnings and capital consumption allowances.
The public sector can also be a source of national saving and this occurs when government revenues are larger than expenditures. Budget surpluses, then, can be viewed as a source of national saving. In Table 11 the sources of saving for the United States during the past 35 years are shown. There are several things to note about these data. More significantly, however, the private sector saving rate net of depreciation, representing saving available for additions to capital, declined considerably in the 1980s.