Investing for Productivity and Prosperity (1994) / Chapter Skim
Currently Skimming:
Summary
Summary
Pages 1-8
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 1... ...
In addition, there are underlying longer-term weaknesses of the economy. To a large extent, our current problems are the cumulative negative effects of nearly a generation of poor economic performance relative to both the previous generation's record and the recent performance of other industrial countries: 30 years of lagging income growth per capita, 25 years of declining net investment, 30 years of national saving below other industrialized economies, and 20 years of gross investment in plant and equipment below that of Japan, Germany, France, Canada, and even the United Kingdom.
|
From page 2... ...
Agreements among governments to undertake growthpromoting policies are in the common interest, and no country, including the United States, entirely controls its own destiny in this respect. Sustained domestic economic growth, nevertheless, depends upon the nation's enterprises achieving and maintaining a competitive position in the world economy by meeting or exceeding international standards of productivity in existing markets and by being innovative in developing new products and markets.
|
From page 3... ...
The nongovernment part of the saving shortfall results from a low and declining rate of private saving by households and companies. The personal saving rate in the United States declined sharply in the late 1980s.
|
From page 4... ...
In an era of low world capital fo~ation attributable to low savings, with increasing demands for capital by many more countries, such dependence raises the cost of capital worldwide. Only Japan is now a real exporter of capital, and the United States is the largest importer.
|
From page 5... ...
The cost of capital is the return financial investors require to induce them to make investments. There is at least indirect evidence, developed by members of the balm and described in this report, that the cost of capital has been higher in the United States than in other major industrial countries and remains higher despite the drop in the Japanese stock market index.
|
From page 6... ...
Unlike plant and equipment, these investments do not generate collateral for the investor and thus are less appropriately financed with debt. Because of the importance of these intangible assets to long-term growth, the STEP board believes that both public and private sectors should be especially concerned about the cost of equity capital and policies that affect it.
|
From page 7... ...
and generally agreed on, measures to move toward them will be crowded out by the exigencies of the moment. The board believes that achieving the twin objectives of moving net saving and investment rates toward ~ to 10 percent of GDP over a 5- to 10-year period would contribute measurably to enhancing relative productivity and job growth in the United States.
|
From page 8... ...
Such a study should involve several of the social science disciplines. It would help to identify ways, in addition to changes in the tax system recommended below, to promote a higher level of saving in the United States.
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.