The Global Financial Resource Curse
Gianluca Benigno, Luca Fornaro, Martin Wolf
American Economic Review · 2025 · Volume 115 · Issue 1
Abstract
We provide a model connecting the global saving glut to productivity growth. The key feature is that the tradable sector is the engine of growth of the economy. Capital flows from developing countries to the United States boost demand for US nontradable goods, inducing a reallocation of US economic activity from the tradable sector to the nontradable one. In turn, lower profits in the tradable sector lead firms to cut back investment in innovation. Since innovation in the United States determines the evolution of the world technological frontier, the result is a drop in global productivity growth.
Keywords
Macroeconomics: Consumption, Saving, Wealth, Investment, Capital, Intangible Capital, Capacity, Macroeconomics: Production, Financial Markets and the Macroeconomy, Current Account Adjustment, Short-term Capital Movements, Economic Growth of Open Economies, Innovation and Invention: Processes and Incentives
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