what are the determinant of saving?

Question

in an underdevelopning countries and how policies can be made to manage it to increase national income

Answer 1

Basically the problem is two-fold: collection of savings, investment back into the economy.

You must make it possible for people all across the economy to be able to put their savings somewhere safe and take it out safely whenever they need. You need to bring the bank to the people so that the small savers become part of the banking sector.

This can be done by small branches regionally and ATMs locally, with restrictions on number of visits/withdrawals to keep costs of operation low. Mobile branches -armoured cars - have been used but that means that people do not have access to their savings as fast, althout it is a cheaper alternative. An education policy on th benefits of putting cash into the bank will have to be undertaken to build confidence into the banking sector.

Secondly, you need to transfer these savings into injections into the economy. I think that micro-credit is what works best for developing countries. It is working wonders in Bangladesh, and can do so everywhere in the world. This will also require a campaign to educate the people on the implications of micro-credit, and how it can change their lives.

Another type of savings and investment programme could be the establishment of cooperative societies at a local level, and the policy will have to include the provision of experts who can help provide councelling to the members of the cooperative on their communal projects. It would be helpful if the experts are local people who have succeeded.

Answer 2

Low inflation, so that savings aren't eroded in real terms. Relaxed taxation policy towards interest on savings. Good interest rates on savings as an incentive toward saving. Low house price inflation, so that people are not tempted to invest their savings in the property market instead of keeping it in interest bearing accounts. Obviously ones spending has to kept below income. I am not sure if there is a direct connection between savings and the national income.

Answer 3

determinants of savings are income and consumption
policies can be made to increase the rate of interest in banks so more people will save .thus banks have more to lend which is then used for investment in productive purposes thus increasing national income

Answer 4

Investment and rate of consumption are the main determinant of savings....

If income will rise and as well as rate of consumption will increase at a decreasing rate it denotes National Income rises because in that situation savings will increase.

If banks' interest will high,people intend to save and that savings will go for investment which will denote higher income..

As a result national income will rise....

Answer 5

Policies don't change the rules of economics. If the law does not protect the property of individuals, then there is no point in accumulating savings which will be seized and redistributed by the government.

This is the classic model for creating an underdeveloped country. If you have an underdeveloped country, you have a country that doesn't protect indvidual property rights.