There is no glut of global saving. Yes, global saving has risen steadily over the past several decades, but contrary to widespread belief, the rise in recent years has been no faster than the expansion of world GDP.

In fact, the overall global saving rate stood at 22.8 per cent of world GDP in 2006, basically unchanged from the 23 per cent reading in 1990. At the same time, there has been an important shift in the mix of global saving - moving away from the rich countries of the developed world toward the poor countries of the developing world. This development, rather than overall trends in global saving, is likely to remain a critical issue for the world economy in the years ahead.

There can be no mistaking the dramatic shift in the mix of global saving in recent years. This is particularly noticeable in the past decade. According to IMF statistics, in 1996 the advanced countries of the developed world accounted for 78 per cent of total global saving.

By 2006, that share had fallen to 65 per cent. Over the same decade, the developing world's share of global saving has risen from 22 per cent in 1996 to 35 per cent in 2006. Put another way, the rich countries of the developed world, which made up 80 per cent of world GDP in 1996, accounted for just 43  of the cumulative increase in global saving over the past decade.

By contrast, the poor countries of the developing world, which made up only 20 per cent of world GDP in 1996, accounted for fully 57 per cent of the cumulative increase in global saving over the 1996 to 2006 period, or approximately three times their weight in the world economy. This wealth transfer from the poor to the rich was the exact opposite of what occurred in the first globalisation of the early 20th century.

The United States, of course, stands out for extreme negligence on the saving front. By 2006, the US' gross savings rate, the combined saving of individuals, businesses, and the government sector stood at just 13.7 per cent. That was down from the 16.5 per cent rate a decade earlier and, by far, the lowest domestic saving rate of any major economy in the developed world.

Over the 1996 to 2006 period, the US accounted for a mere 12 per cent of the total growth in worldwide saving, less than half its 26 per cent share as of 1996. Elsewhere in the developed world, it has been more of a mixed picture. The Japanese saving rate, while a good deal higher than that of the US, fell from 30.4 per cent in 1996 to 28.0 per cent in 2006. By contrast, gross saving in the Euro Area held steady at around 21.0 per cent over the past 10 years.

Trends in the major countries in the developing world (especially Asia) stand in sharp contrast to those in the developed world. Collectively, these economies have taken their gross domestic saving rate from 33 per cent in 1996 to 42 per cent in 2006 - enough to account for 31 per cent of the overall gain in global saving over this period (4.5 times their combined 7 per cent share in 1996). Here, there cannot be any mistaking the dominant role played by China in driving saving flows in the region.

According to IMF estimates, China's gross domestic saving rate rose from 40.5 per cent to 50 per cent in this period. To put this simply, China accounted for about 23 per cent of the growth in global saving over the past decade, or three-fourths of developing Asia's contribution to the increase in world saving.

Elsewhere in Asia, the global saving impetus over the past decade has been small. For example, only 3 per cent from the region's newly industrialised economies (i.e., Korea, Taiwan, Singapore, and Hong Kong). The Middle East is the only other significant source of incremental growth in global saving accounting for 8 per cent of the cumulative gain in world saving over the past decade.

The world is not having an easy time sorting out this battle over the shifting mix of global saving. For its part, the developed world seems more than content to maintain the status quo. That is especially the case for the US, which has long been drawing freely on the saving surpluses of others. In the developing world, however, there is greater tension over the current state of affairs.

Lacking in internal support from private consumption, externally dependent emerging economies have been more than content to use their saving flows to subsidise their currencies. At the same time, most developing economies recognise that their growth models cannot be sustained without a draw down in surplus saving and a concomitant increase in private consumption.

Saving is the seed-corn for future economic growth. Without it, nations cannot invest in physical or human capital. Also, the only way the benefits of economic growth can be distributed fairly is through income parity and better consumption patterns.