Industrial investment and financial requirements

The present period of slack investment is likely to give way to a fresh investment cycle in the next 5–10 years. Internationally the savings necessary for the provision of capital will be more abundant than ever. However, the structure of savings is changing in favour of risk-averting forms. This is true of savings of private house-holds which benefitting from rising incomes, are increasing in significance. The same applies to the provision of savings, if any, through official insurance schemes, which at least in Europe are found to invest virtually exclusively in fixed-interest securities. The agglomeration of capital in the oil-rich nations, which is also invested with a view to risk aversion, operate in the same direction. By contrast, the capability of firms to generate savings and hence risk-bearing funds is declining. This lack of risk capital threatens to create serious financial obstacles to growth. For risk-bearing corporate capital funds form the yardstick by which the banks, as intermediaries between savers and investors, assess their possibilities to assist enterprises through loans or bond issues. This situation gives rise to political and social problems which must be considered seriously in all long-term policy planning and forecasts.