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This chapter examines the mobilization of the savings/resources of both foreign and domestic sources for investment in both the public and private sectors. The foreign sources of resources/savings examined are foreign direct investment, Japanese government grants, and foreign loans, which were largely supplied by Japan, in addition to the savings of both the Japanese and Koreans in Korea. The domestic savings examined are the sources of owners' equity and loans of financial institutions, which may be traced to the savings of both Japanese and Koreans. These have increased over time partly due to the enforcement of the government savings policy. The credit policies of the financial institutions are examined, which directed the mobilized savings to certain targeted industries under the government's guidance. Other facets of mobilization of savings for investment analyzed include: Who supplied the most resources/savings for investment, and to what extent? Who were the borrowers and in what sectors? What were the terms of loans? Who financed them? These analyses may provide insight to capital formation and motives for financing investment in Korea.

During the past two decades, Costa Rica has transformed its pension system into a ‘mixed model’ that combines collective and individual savings. This chapter focuses on the structural reform approved in 2000 and in effect since May 2001 and the parametric reform approved in May 2005. The 2000 reform created a multipillar system, which included the R égimen de Invalidez, Vejez y Muerte (RIVM, or the Disability, Old-Age, and Survivorship Regime). The RIVM was created in 1943 and currently reaches nine out of every ten insured workers in the country. The 2005 parametric reform modified requirements and benefits of the RIVM and created new benefits while seeking to strengthen the collective capitalization system. Both reforms strengthened the administrative effectiveness of the RIVM. The chapter discusses the main historical characteristics of the pension system, focusing on the RIVM; describes the political context for the design and adoption of the main reforms of the past five years; and explains both reforms in detail. It also examines the strengths and weaknesses of the implementation process and concludes with an exploration of tensions within the Costa Rican pension reform.

This chapter assesses the balance between investment and savings by examining the deficit and surplus savings sectors for the last half of the 20th century following the Korean War. In order to gain comprehensive insight into the contribution of each component of investment to the overall capital formation and economic development of the country, investment is linked to the sources of the savings that financed it, and their relationship and relative importance are evaluated.

This chapter investigates how foreign influences through trade, investment, and other forms of interaction affected the capital formation and economic transformation of Korea during the 30-year transitional period between the opening of the country to the outside world in 1876 and when it became a Japanese protectorate in 1904. It examines the extent to which the infusion of foreign resources, Western technology, and education from foreign countries played a major role as the purveyors of Western thought, technology, investment, and the forces of change and innovation. Korea's responses to the encroaching new foreign forces in terms of domestic institutional reforms and public investments including investment in human capital are assessed. The responses of the private sector, including the Korean people (e.g., society's elites (yangban), merchants, craftsmen, and common citizens) during the transitional period are analyzed. The chapter also examines the question of whether Korea had the motivation to transform into a modern economy. The last part of the chapter assesses Korea's national income, consumption, and savings during the transitional period as a result of foreign incursion.

This chapter investigates how the colonial government promoted capital formation through fiscal and financial policies, by providing financial incentives and creating a favorable economic environment to invest in newly-produced capital assets. The fiscal policies examined are the taxation and subsidy measures that enhanced business opportunities for profit, especially in the targeted industries. The financial policies examined are those that established various financial institutions to mobilize savings — both from domestic and foreign sources — and allocate loans with subsidized interest for investment in the targeted industries through public financial institutions. The means through which savings were mobilized are examined, including deposits in financial institutions, which were loaned out for investment; Japanese government grants, foreign borrowings, and “forced savings” through currency issues to supplement inadequate owners equity. Since the government's excessive intervention through preferential schemes, such as directed credits, subsidies, and tax exemptions carried a considerable economic burden, its negative impact is also evaluated.

This chapter assesses the impact of capital formation and economic development under Japanese rule on income distribution, consumption (standard of living), and savings in Korea, focusing those of Koreans and Japanese in Korea. This allows the evaluation of the ultimate beneficiaries of economic growth and transformation in the country relative to various economic sectors (e.g., industry and agriculture), income groups (e.g., landlords, farmers, businesses, and wage earners), and different nationalities (i.e., Koreans and Japanese). Similar analyses have been performed relative to personal consumption and savings, as well as business savings based on economic/income sectors/groups and nationality.

Though macroeconomics was developed for developed countries, developing countries often use this corpus of knowledge — with its competing schools of thought — without any significant modification. It is by no means clear that applying these theories to developing countries is either justified or appropriate. This chapter examines the differences in macroeconomic policy between developing and developed countries. The basic macroeconomic aggregates: output, employment, and inflation are, of course, the same for both developed and developing economies. So too are the basic identities and equilibrium conditions: savings must still equal investment, output must equal income, and aggregate demand is the sum of consumption, investment, government expenditures, and net exports. However, systematic differences between the economies of developed and developing countries and between developing countries themselves, such as the relative effectiveness of macroeconomic tools, give rise to large variation in economic outcomes and policy choices.

This chapter reviews income and welfare measurement and examines the central topics of assets and sustainability with the evaluation of key conceptual and theoretical literature. It also outlines the methods of asset accounting and presents selected empirical results from ‘greening’ the national accounts. Linkages to policy are explored, followed by broad conclusions on some basic questions: To what extent has the promise of environmental accounting been realized? Which approach has the greatest policy significance? And where is environmental accounting likely to be most useful? Finally, it studies the recent empirical results from Southern Africa and explores policy linkage with concluding remarks.

This chapter introduces the Encuesta de Previsión Social (EPS, or Social Protection Survey), a recently developed longitudinal survey of individual respondents that provides invaluable new information for microeconomic analyses of key aspects of the Chilean pension system, and illustrates some of the analyses possible with these data. Initiated in 2002, the EPS fielded a follow-up round in 2004; additional survey waves were scheduled for 2006 and every two years thereafter (funding permitting). In addition, the research team has worked to link respondent records to a wide range of historical administrative files on contribution patterns, benefit payments, and other program features. Among the findings is that participation rates are much higher with automatic enrolment in retirement plans than with opt-in enrolment. Many individuals view the employer default savings option as an implicit endorsement of both the contribution rate and the distribution of funds. Default choices are not neutral; they play a role in every stage of the lifetime savings cycle, including savings plan participation, contributions, asset allocation, rollovers, and decumulation.

If transaction costs are small, standard economic theory would suggest that defaults have little impact on economic outcomes. Agents with well-defined preferences will opt out of any default that does not maximize their utility, regardless of the nature of the default. In practice, however, defaults can have sizable effects on economic outcomes. This chapter summarizes the empirical evidence on defaults in savings outcomes, which strongly suggests that defaults affect savings outcomes at every step along the way. The different types of US retirement income institutions and some of their salient characteristics are described. Empirical evidence from the USA and other countries, including Chile, Mexico, and Sweden is presented on how defaults influence retirement savings outcomes at all stages of the savings life cycle, including savings plan participation, savings rates, asset allocation, and post-retirement savings distributions. The chapter then examines why defaults have such a tremendous impact on savings outcomes. Finally, it considers the role of public policy toward retirement saving when defaults matter.

This essay offers a comprehensive assessment of the cost savings over the first five years of the allowance trading program. The current study has two methodological advantages over the previous ones. The first is the completeness of the data used. Like the two previous studies, this study estimates scrubber costs from costs reported in survey data, although the current study is able to use cost data from the full five years of Phase I. The data on coal prices used here are much more detailed than that in the other two studies, allowing for plant-level estimates of sulfur premia and counterfactual sulfur content. The second and more significant advantage of the current study is methodological. It employs an econometric model of the abatement choices actually made by utilities to simulate the decisions that would have been made under prescriptive regulation. Thus, abatement costs under counterfactual policies are estimated on the basis of observed behavior under actual policy regimes, rather than on the basis of engineering estimates or least-cost algorithms.

This chapter analyzes pension reform in Peru. Peru's reform introduced private savings accounts while maintaining a fiscally unsustainable public pillar that must eventually be fixed. A number of factors led to the slow acceptance of the new system, including the fact that workers had more incentive to remain in the old PAYGO system, which offered a lower contribution rate, a lower retirement age, and a minimum pension guarantee. However, eventual adjustments allowed the new system to compete more effectively for workers. The performance of the Peruvian system with respect to investment, fees, competition, and coverage is analyzed, and it is argued that reducing political interference is crucial to its future success.

This chapter describes Uruguay's 1995 pension reform, which is based on a multipillar or mixed, system, with contributions and benefits linked to both a state-managed PAYGO system and privately managed individual savings accounts. Since its implementation, the reform faced challenges arising from its design, turbulent financial markets, and difficulties with respect to political and social acceptance. The new pension system emerged in good condition after the country's worst financial crisis, which happened in 2002. The system now faces renewed political challenges after the election of a political coalition that had opposed the creation of the new mixed system. However, the lack of a viable alternative to the 1995 reform suggests that current policies will be maintained, though it is likely that policymakers will make advisable and necessary adjustments.

This chapter looks at the history of Germany’s savings and cooperative banks, and their relationship with government and small firms up to the early 1930s. It analyses the link between local production systems and local sources of finance.

This chapter analyses the segmented nature of France’s banking system up to the early 1930s. It focuses on the social and political reasons why French small firms were able to influence the government’s economic policy, including banking regulation. The chapter also reassesses the role played by small firms in the process of French economic growth.

This chapter explores the nature of Italy’s ‘dual model’ of economic development up to the early 1930s, and how this is linked to the existence of a segmented banking system. It also analyses the political connections between government, small local banks, and regional economies.