and stay at the 2016 shares up to 2022.<sup>12</sup> Government domestic and foreign borrowing is defined to keep the domestic and foreign debt/GDP ratios at roughly the observed levels for 2012.

- Government spending and government closure.<sup>13</sup> Each government function requires recurrent (consumption) and capital (investment) spending, set to make sure that growth in real consumption and capital stocks are in balance. For most government final demands (disaggregated by function), the GDP share of spending on consumption or investment (depending on whether the function is service-oriented, dominated by consumption spending, or infrastructure-oriented, dominated by investment spending) is scaled to ensure that total government spending stays within the limits of fiscal space. The only exception among government final demands is for education since it is important that service growth rates at each level be sensitive to differences in enrollment growth between levels; drawing on cross-country evidence, educational quality (the quantity of real services per student) at each level is set to grow at roughly the growth rate of GDP (or absorption) per capita. Among other spending items (i.e., items other than final demands), the main subsidy, on electricity (in the database represented by the “energy and heat” sector) and domestic transfer payments both remain at the 2012 GDP shares (1.5 and 4.5 percent, respectively) throughout the simulation period.

- In the savings-investment balance, domestically financed private investment is exogenous as a share of GDP at the 2012 level. The balance clears via adjustments in household savings rates for the two household types with the highest savings rates (non-farm non-poor rural households and urban non-poor households).<sup>14</sup>

- In the balance of payments, FDI and net receipts of private transfers from abroad (including “worker remittances”) are both fixed as shares of GDP.  Private net foreign borrowing (which is small) is set to maintain a roughly unchanged ratio between private foreign debt and GDP. The balance clears via adjustments in the real exchange rate, which influences the trade balance (as described in above Section 3).

Key results for the _base_ and other scenarios are summarized and compared in Tables 4.1-4.4 and Figures 4.1-4.4. (Additional results are shown in Appendix Tables A2.3-A2.4.) Macro results are found in Table 4.1. GDP at factor cost grows at an average annual rate of 4.3 percent out of which 1.5 percent is due to TFP growth) while the growth rates for most other national account aggregates are quite similar, in the range of 4-6 percent. If viewed from a per-capita perspective, growth rates should be lowered on the basis of an annual population rate of 1.9 percent. The real exchange rate is roughly unchanged. Growth is sufficient to reduce the

> 12 The GDP shares are generated via endogenous and uniform scaling of the disaggregated tax rates that are implicit in the 2008 SAM.

> 13 The term “closure” refers to the rule on the basis of which an account is balanced. In MAMS, alternative options are available for the government and rest-of-world balances (i.e., the government budget, and the balance of payments, respectively).

> 14 Among the other savings and investment categories, FDI (which may be viewed as a type of savings from abroad earmarked for private investment) is automatically translated into investment whereas government investment is financed as part of the government budget.

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