Improving level of national investment

Reversing decline in domestic investment
The major objective of the next decade must be to raise the rate of accumulation of capital and improve its allocation. In a great many countries gross domestic investment actually declined during the 1980s, and that pattern clearly must be reversed if even minimum growth objectives are to be attained. Whilst there are exceptions (particularly China and India), in low-income economies as a group investment increased only 0.4% per annum. This implies a heavily negative rate of growth in per capita terms. In the middle-income economies the growth of investment was negative, and the lower middle-income economies fared worse than the upper middle-income ones.

The most serious situation as regards investment occurred in two overlapping groups of countries - sub-Saharan Africa and the highly indebted countries. In sub-Saharan Africa gross investment declined at an annual rate of 9.3% a year during the 1980s, and in the highly indebted countries it declined by 6.3% a year. The stock of capital per head of the population obviously declined sharply in many third world countries and it should be an object of public policy to recreate conditions for higher levels of investment.

Type Classification:
D: Detailed strategies