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Definition

This is an economics concept which indicates how much of their income people in the economy as a whole will spend. Whatever is left is saved. The savings rate is critical to the economy because those savings are used by business to invest in further growth. If the marginal propensity to consume is 90% then the savings rate is 10%. Countries with a very low savings rate, like South Africa, have to rely on foreign direct investment (FDI) and company profits to finance growth. This tends to mean that they have a very low growth rate.

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