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some of the need for private saving. In earlier times, as the life cycle model of consumption suggests, a household would save during working years to build up a nest egg for retirement. When the government collects social security benefits, people have less need to save for retirement. Other income-support systems have a similar effect, reducing the need to save for a rainy day: crop Insurance for farmers, unemployment Insurance for workers, and medical care for the poor and elderly all alleviate ate precautionary motive for people to save.

* Capital markets. Until recently, capital markets had numerous imperfection. people found it hard to borrow funds for worthwhile purposes, whether for buying a house. Financing an education, or starting a business. As capital markets developed, often with the help of government, new loan instruments allowed people to borrow more easily. One example is the proliferation of credit cards, which encourage people, to borrow (even though the interest rates are quite high).

* The rapid growth in wealth. Part of the decline in personal saving in the 1990s was surely caused by the rapid increase in personal wealth. primarily due to the exploding stock markets from 1995 to 1999 for example, the value of stocks rose by about $ 5 trillion. if households spent 3 percent of this gain each year .

Determinants of investment: The second major component of private spending is investment. Investment contains three elements. These are-

Revenues: An investment will bring the firm additional revenue if it helps the firm sell more product. This suggests that the overall level of output (or GDP) will be an important determinant of investment. When factories are lying idle, firms have relatively little need for new factories, so investment is low. More generally, investment depends upon the revenues that will be generated by the state of overall economic activity.

Costs: A second important determinant of the level of investment is the costs of investing. Because investment goods last many years, reckoning the costs of investment is somewhat more complicated than doing so for other commodities like coal or wheat. For durable goods, the cost of capital includes not only the price of the capital good but also the interest rate that borrowers pay to finance the capital as well as the taxes that firms pay on their incomes.

Expectations: The third element in the determination of investment is profit expectations and business confidence. Investment is, above all, a gamble on the future, a bet that the revenue from an investment will exceed its costs. If businesses are concerned that political conditions in Russia are unstable, they will be reluctant to invest there. Conversely, because businesses believe (rightly or wrongly) that Internet commerce will be an important feature of the distribution network, they are investing heavily in that sector. Thus investment decisions hang by a thread on expectations and forecasts.

Source: Bangladesh Bureau of Statistics (BBS)

Form the above table we see the present year wise rates of domestic and national savings for the last few years. In FY 2001-02 the domestic and national savings as percentage of GDP were 18.16 and 23.44 percent respectively. Domestic and national savings had reached to 20.31 and 30.21 percent of GDP respectively in FY 2007-08. According to provisional est