Ultimately the question relates to whether a higher national savings rate is desirable, and the extent to this should be an explicit goal of policy. This is particularly true for East Asia where the aggregate and public sector savings rate are quite high and where even higher investment rates have fuelled higher economic growth and rising per capita income.
For the less developed Tigers, the financial implications of ageing population are less daunting for the foreseeable future. For these countries, achieving high rates of savings would appear an important policy objective, but more so in order to achieve the rapid growth necessary for raising per capita income levels. In effect, achieving rapid growth is one form of “prefunding”.