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Originally Posted by Merlinboy  I didn't quite understand all of this quote , maybe you can be more precise please . |
http://en.wikipedia.org/wiki/Savings_rate.
An example, the money saved by Romanian workers in the west can be spent in several ways:
1. Buy BMW cars or other luxury cars.
2. Deposited in bank account, (the bank will find a way to invest)
3. Purchase homes in Romania, which will boost real estate construction investment
4. Buy stocks of corporations
5. Purchase capital equipment for industrial and agricultural production, and for providing service to people.
#1 is consumption and the rest are investment.
There are several counties and small cities in China, where many legal or illegal immigrant people worked oversea. People from these areas invested in all kinds of industries with the money they made oversea. Now, people from these areas are so rich that they form consortiums with their capital to speculate real estate price in other cities. Their capital is so big now that they can control the price of real estate in some cities.
One of key factor for China's high speed economic development is that China has very high savings rate. Savings rate of China is close to 50%, which provides ample financial support for infrastructure and industrial production investment.
Barney: I know that you feel that it is not fair for Chinese to have so high savings rate in the international competition.
Actually, the Chinese government is encouraging domestic consumption now so that its economy can be less dependent on export.
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Originally Posted by Merlinboy And funny, i've just received on my email a powerpoint presentation about a city ( or town ) called MACAO. If you want give me your email address so i can forward it , i think you'll love it as much as i did !  |
Is it a project to imitate Chinese city Macao? Macao is a island city that Chinese "lent" to Portugal as colony in 19th century. It has returned to China as Special Administrative Region now. The city relies on gambling income. Its gambling revenue has exceeded gambling city Las Vegas in US last year. In Europe, you have a similar city, Monte Carlo. Chinese are fond of gambling. I hate this bad Chinese characteristic. But, if Romania wants to build a second "Monte Carlo" or Macao town, it might not be a bad idea from economic point of view.
A friend of mine who is investment business has recently visited Romania and Bulgaria. After he learned that I lived in Romania for several years, he told me that Bulgaria is better developed than Romania in the impression of his visit. From historical point of view, it is understandable that Romania is behind France or Germany. Man, if Romania falls behind Bulgaria, Romania government should feel a strong pressure! I read a geography book written in 1950s or 1960s when I was a child. Romania was said to be known to have petrochemical industry while Bulgaria was said to be known for growing roses (probably for use in French perfume.).
Coming back to the Romania's economy in 1970s and 1980s, Ceausescu had very big ambition to industrialize Romania. In an exhibition that I visited in Romania in 1980s, Romania showed all kinds of products, from electronic watches to helicopters. There were also many big projects on going in 1980s, such as hydroelectric dam in Danube River. The problem was that the international competitiveness was not taken into account when Romania made those products, but it was forgivable considering that world was still in cold war and globalization was still in cradle. The other problem was that Ceausescu mismanaged finance. In the 1970s, Ceausescu government got some loans from the West. Ceausescu government had difficulty to pay back those loans in 1980s while the government was still financing the big projects. As the results, the living standard declined drastically and consumer products were scarce in the 1980s (I witnessed the decline when I was there and I even saw the food shortage.). I assumed that Romania had very high saving rate then, but the decline of living standard caused strong dissatisfaction of Romanian people, which eventually led to the dramatic downfall of Ceausescu regime. However, what Ceausescu did is not completely without any merit. This statement is definitely not politically correct in Romania now, but I am interested in being correct rather than being politically correct. That is my shallow and amateur view of Romanian economic history in 1970s and 1980s as an outsider.