The Exhaustion of Fixed Capital in the Technological Strategy of Countries

Iván Escudero Sánchez
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Iván Escudero Sánchez: Complutense University of Madrid, Spain

Journal of Economic Development, 2025, vol. 50, issue 3, 55-79

Abstract: This paper empirically demonstrates the productivity exhaustion entailed by the continuous accumulation of fixed capital in technological advancement, as part of the imitation strategy adopted by countries. It investigates the relationship between fixed capital per employee and the distance to the technological frontier in terms of Total Factor Productivity (TFP), using panel data from 118 countries during the period 1955-2019. The results reveal a diminishing marginal relationship between physical capital and technical progress in developed countries, especially in the top ten largest advanced economies in the world. These findings suggest the existence of a limit on the amount of capital per worker, beyond which no further technical progress would occur, thus indicating the erosion of the imitative strategy in the long term.

Keywords: Total Factor Productivity; Technological Frontier; Fixed Capital; Technical Progress (search for similar items in EconPapers)
JEL-codes: E22 O11 O33 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ris:jecdev:021629

DOI: 10.35866/caujed.2024.50.3.003

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