Abstract:

The global financial crisis has underlined the interdependences between all EU economies in recent years, raising questions about the efficience of the pre-crisis growth model.

In a recent report WEF points out that the European growth model needs to be adjusted and not abandoned. Therefore, the efforts should not be further diverted from achieving the fundamental longer term goal of creating a highly competitive, inclusive and sustainable society to better enable Europe’s economies to absorb shocks and ensure stable economic performance going into the future.

Furthemore, Mankiw, in a study on economic growth in the very long-run, points out that the causality  between investments and savings rates and the level of real GDP is strong, revealing why some countries are rich and others poor.
This paper analyzes the role of saving and investments in obtaining a sustainable log-run growth, taking into consideration the influences of factors like: the effects of the financial crisis on the sustanability of the European growth model, the differences between EU countries from the economic development perspective, the political stability etc.

Especially the analysis is focused on the evolution of the investments, saving and real GDP relationship during the financial crisis, for the EU-27 countries.