Economic Growth and the Returns to Investment

摘要

The paper derives a relationship between the rate of economic growth and variables representing the rate and allocative efficiency of investment. Allocative efficiency is measured by the social rate of return to investment. The paper departs from the methods followed in a number of growth accounting studies over the past 30 years, in which investment's contribution to economic growth was estimated to be small. It attempts to show instead that when efficiently applied to the task of raising output, investment accounts for most of a country's growth - and, conversely, when inefficiently applied to the task, accounts for most of a country's economic decline or failure to grow. Much emphasis is placed on the product of the rate of investment and the social rate of return to investment.