But a significant amount of investment may have no identifiable link at all to domestic saving, because savings have flowed out of the country through one channel and investment funds have flowed in through a completely different one. I shall return to this point in a minute. Returning to the behaviour of domestic saving and investment, the chart shows the excess of saving over investment in graphic form. I have then added a column representing the recorded inflow of foreign direct investment. The latter may perhaps be regarded as the category of inflow likely to be most closely associated with physical investment. If you add that to the surplus of saving over investment (i.e. the two columns together), you can visualise in the majority of instances a significant potential over-funding of investment, even before taking account of any inflows of portfolio funds or bank finance which may head to the same destination. Does this mean that there has in practice been more than enough money around in these countries to finance all desired investment? Of course not. As hinted earlier, I have failed so far to take any account of capital outflows. Part - in many cases perhaps a substantial part - of domestic savings is 1  BIS Review 52/1999  exported.
That reflects the mark-down in global growth, heightened geo-political and financial risks and the weak pipeline of inflationary pressures from wages internally and commodity prices externally. Taken together, this implies interest rates could remain lower for longer, certainly than I had expected three months ago, without endangering the inflation target. Thank you. 8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  12  BIS central bankers’ speeches  BIS central bankers’ speeches  13  14  BIS central bankers’ speeches  BIS central bankers’ speeches  15  16  BIS central bankers’ speeches  BIS central bankers’ speeches  17  18  BIS central bankers’ speeches  BIS central bankers’ speeches  19  20  BIS central bankers’ speeches  References Acemoglu, D and Autor, D H (2010), “Skills, tasks and technology: Implications for employment and earnings”, NBER Working Paper No. 16082, National Bureau of Economic Research, Cambridge, MA. Autor, D H, Katz, L F and Kearney, M S (2006), “The polarization of the US labor market”, American Economic Review: Papers and Proceedings, Vol. 96, No. 2, pp. 189–94. Autor, D, Levy, F and Murnane, RJ (2003), “The skill content of recent technological change: An empirical exploration”, Quarterly Journal of Economics, Vol. 118, No. 4, pp. 1279–1333. Bank of England (2014), “August 2014 Inflation Report”, available http://www.bankofengland.co.uk/publications/Pages/inflationreport/2014/ir1403.aspx.