How They Worked For East Asia Savings is probably the most important ingredient in a country's economic growth. It is out of savings that a nation's investments are generated. Countries with high economic growth have usually experienced high savings. All growth theories are essentially theories of savings. Yet, savings per se does not promote growth.
Savings promotes growth when such savings are invested to generate more wealth.
In the developing countries, the problem is how to generate such savings. Seen from the context of savings, poverty means that the income of the people concerned are so low that it is difficult for them to meet their full consumption needs. Savings, under such circumstances is a near impossibility. The issue of savings then goes towards the issue of income generation. A further problem is that even when savings are generated, the level of entrepreneurship in the country may be so low that there is no one to invest that savings.