Why did Adam Smith believe that high saving rates can drive economic growth? How does saving promote growth through the factors of production?
19. What does the following figure show? Is this piece of empirical evidence in favor of or against Smith's theory on saving mentioned in the previous question? Explain. Income per person in 2014 (logarithmic scale) Correlation = 0.71 100,000 Norway Singapore United Kingdom South Korea Bermuda Maldives Anguilla Croatia Egypt 10,000 El Salvador Morocco Philippines Ireland Bhutan Cape Verde Nicaragua Syria Tajikistan Ghana Zambia Cameroon Nepal Kenya Sudan Burundi Niger Central African Republic 100 5 10 Effective investment rate (average 1995-2014) Mankiw, Macroeconomics, 10e, 2019 Worth Publishers