Sunday, January 5, 2020

Financial System And Economic Development - 1001 Words

In a developing country, such as Egypt, misuse and/or lack of foreign exchange is a main constraint to investment and economic growth, as foreign exchange is necessary to obtain foreign intermediate and capital goods. In addition, lack of foreign exchange results in devaluation of the Egyptian pound, which considered the main cause of inflation in the Egyptian economy. 4. Financial System and Economic Development Goals This section examines the efficiency by which the Egyptian financial system allocates and directs savings to achieve economic development goals. 4.1Efficiency of Utilizing Savings As mentioned before, carrying-out investments is the cornerstone of any economic development process. While savings are the main resources in the process of carrying-out investments, then it is useful to measure the efficiency of utilizing savings (the ability of savings to carry-out investments). In this context, savings are considered inputs while investment spending is considered the output in the process of carrying-out investments. A Data Envelopment Analysis (DEA) methodology will be used to estimate the investment spending (output) frontier for the purpose of calculating the efficiency of utilizing savings (input) (Coelli T. J, 1996). Appendix (3) illustrates the results of output-orientated DEA for the production of single output (investment spending) using a single input (savings). The analysis shows three concepts of efficiency: Over all technical efficiency, pureShow MoreRelatedThe Economic Development Of The Financial System Essay2086 Words   |  9 PagesINTRODUCTION The economic development of most of the countries depends upon the efficiency of a well organized financial system. 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