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The Exhaustion of Fixed Capital in the Technological Strategy of Countries

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  • Iván Escudero Sánchez

    (Complutense University of Madrid, Spain)

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.

Suggested Citation

  • Iván Escudero Sánchez, 2025. "The Exhaustion of Fixed Capital in the Technological Strategy of Countries," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 50(3), pages 55-79, September.
    • Handle: RePEc:ris:jecdev:021629
    DOI: 10.35866/caujed.2024.50.3.003
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    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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