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The Productivity of Investment Determines Economic Growth Across Countries

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Listed:
  • José Reyes Bernal-Bellón

    (Universidad Antonio Nariño)

  • Eduardo Aponte Rincón

    (Universidad Antonio Nariño)

Abstract

The purpose of this paper is to show that the marginal capital-output ratio in Harrod's equation is explained by the growth rate of aggregate demand, and that this ratio, in turn, defines the economic growth rate of countries. To test these hypotheses, data from the Penn World Table PWT 10.0 was used, selecting 118 countries with complete information from 2000 to 2019. The estimation method employed was panel data with fixed effects. The conclusion reached is that the elasticity of the marginal capital-output ratio with respect to demand growth is unitary, as is the elasticity of economic growth with respect to investment efficiency.

Suggested Citation

  • José Reyes Bernal-Bellón & Eduardo Aponte Rincón, 2025. "The Productivity of Investment Determines Economic Growth Across Countries," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 103, pages 129-146, June.
    • Handle: RePEc:lde:journl:y:2025:i:103:p:129-146
    DOI: 10.17533/udea.le.n103a358502
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    References listed on IDEAS

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    1. Nicholas Kaldor, 1961. "Capital Accumulation and Economic Growth," International Economic Association Series, in: D. C. Hague (ed.), The Theory of Capital, chapter 0, pages 177-222, Palgrave Macmillan.
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    Keywords

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    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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