Why Still Worry About the Capital Account Surplus?
External imbalances should not be considered worrisome, in and of themselves. On the contrary, since capital inflow or foreign saving complements domestic savings, it plays an important role in the process of domestic capital accumulation enabling faster economic growth. Meanwhile, the national income of creditor countries also rises to the extent that international lenders earn higher returns on their saving than possible in their own economies.
© The Author(s) and the Centre for Independent Studies 2005. Please refer to the journal's website for access to the definitive, published version.