Why does the world persist with using its savings inefficiently?

We note that global savings are captured by inefficient uses that do not contribute to raising global potential production. In particular: A significant share of global savings finances fiscal deficits that result from public transfer spending; The United States attracts significant capital from the rest of the world that could have been used to finance productive capital in low-income emerging countries; Because of financial repression (capital controls), Chinese savings remain in China and finance inefficient investments, especially in construction; Last, the real estate share of global savings remains very sizeable. The magnitude of these inefficient uses of global savings weakens global potential growth.