Accumulating capital

A central policy objective during the next decade must be to raise the rate of accumulation of capital and improve its allocation. In a great many countries gross domestic investment actually declined during the 1980s, and that pattern clearly must be reversed if even minimum growth objectives are to be attained. Unfortunately it is not enough merely to raise the rate of growth of investment in view of the fact there was a tendency throughout the developing world for the efficiency of investment to decline in the 1980s. In the coming decade it will be important for governments to take what steps they can to increase the efficiency of investment so that it at least regains the levels experienced in the 1970s. In addition to a restructuring of output, this may require reform of investment procedures within central government ministries, improved criteria for investment decisions in public sector enterprises and price reforms designed to channel private investment in more socially optimal directions.