Research On The Savings And Investment Relationship

Savings-investment identity is an important prerequisite for the balanced development of thenational economy, and our serious savings-investment imbalances mainly due to savings-investment inlow conversion efficiency.Reforming and opening up to date from1978s, the degree of our country’s economy and openingup has been in steady improvement in the state, a lot of foreign direct investment flows into China, and also,our country also has a considerable part of direct investment flowing into international. These foreign directinvestment, and our part of the investment into international is an important factor why our savings-investment in low conversion rate.The low conversion efficiency of China’s savings-investment, there is another important reason isthat low efficiency in absorption and utilization of foreign savings(on another perspective, foreign directinvestment is the remaining savings from foreign).Further more,the utilization of foreign resources(forexample, foreign direct investment) contribution to China’s economy is not high, with the consideration ofconsecutive years of trade surplus, foreign enterprises occupy a large amount of domestic resources byremaining output of savings abroad.Detailed in the sub-sector savings-investment empirical research, we found that the rate ofcontribution of household sector savings, government sector savings,departments and corporate sectorsavings to China’s investment rate varied between them although there are significant short-termfluctuations adjustment mechanism, but in the process of transformation from the savings to investmet,there is a longer lag effect in the corporate sector and the government sector savings contributed toinvestment, government savings and corporate savings in the short term can not pull the investment rateraising. Although the savings of the household sector take up a larger proportion of national savings, but thesavings of the household savings-investment conversion rate is quite low. This may be another key thatthe present stage savings-investment conversion rate is low.Firstly, we begin a brief overview of existing savings-investment theory, Adam Smith, Keynes,Harrod, Solow-Swan, Feldstein and Horioka(1980) saving-investment theory model, having a general understanding of the existing theories. We can easily finding out the current analysis are generally focusedon the conversion rate between savings and investment level, as well as the contribution to economicgrowth. The investment comes from savings as well as is an important factor for economic taking-off,which we have long known. However,what is the percentage of the savings into investment? How much isthe level of conversion efficiency of saving to investment.What the enhancement of the rate of investmentplayed a role in the short-term and long-term? This is the focus of this study.In an open economy, capital can freely flows, savings of a country free output to foreigh, the"investment" in other countries may comes from our real foreign savings surplus, behind these capitalflowing, What is the essence of the savings and investment, what is the kind of role-playing? This is alsodescribed in this article.In context of the free movement of capital,in order to more detailed description ofthe efficiency of savings into investment, and the relations between then, the paper analyzes the openeconomy savings investment relations and the introduction of the impact of FDI on the relationshipbetween them, and also the domestic economy over the efficiency of the savings-investment conversionbetween different departments as well as the contribution to the national investment rate.In order to compare our savings rate and investment rate with international country’s savings rateand investment rate for convenience, we define savings rate and investment rate, we have adoptedSNA1993.The end of this article, the author also put forward relevant suggestions for our savings-investment conversion rate being low: absorbing private capital as much as possible, providing a variety ofinvestment channels, creating a diversified investment platform. In terms of opening up to Foreign capitalmarket, we need a rational view of the influx of foreign capital, the rational utilize the foreign capital in arational way.