As background, in a closed economy Y (income) = E (expenditure) which
is a basic Keynesian rule of economics, from this,
S (savings) is a 'leakage' (expenditure that is withheld from the
I (investment) is an 'injection' (extra expenditure funded from
Y = E + S or S =Y - C
Y = E + I or I = Y - C
..therefore in a closed economy S (savings) = I (investment), and
investment can never be greater than savings, infact investment always
The statement is correct as the normal balance (equilibrium) of a
closed economy is disturbed by external variables such as 'foreign'
investment such as cash injections into the once 'closed' economy.
Similarly savings may not stay within the economy and migrate to
another. Clearly with this interchange of savings and investments
between one economy and another, certain economies will accrue either
more savings and investments than another. This creates an imbalance
and the equilibrium of a closed economy is breeched causing
Additionally if goods are imported from one economy to another this
will affect the level of investment, as firms pull back production as
some of the domestic demand is satisfied by foreign goods. Similarly
savings will be affected as some expenditure will be on imported
goods, and there will be an outflow of money.
Chapter 17 "National Income Determination" page 203
"Key Facts Passbook - Economics" by Roger Maile BA
Published 1980 by Intercontinental Book Productions
I hope that helps, if you need clarification of the answer just ask.