Some analysts caution against a low saving rate. They argue that high capital investment leads to higher economic growth and a higher future standard of living. But if capital investment is not financed by national saving it has to be financed by borrowing abroad. 20 Persistent borrowing from abroad builds up international liabilities and implies increasing flow of funds will be sent abroad as interest and dividends. National saving is composed of two components: private saving and public saving. Private saving is the saving by households and businesses while public saving is the budget surpluses of local, state, and federal governments
