Persistence of Extensive Growth
If the key word of Chapter Two is “modernization investment”, the key word of Chapter three is “misinvestment”. What is a misinvestment? A misinvestment is an investment which conserves or changes the composition of capital stock away from its desired long run composition. Misinvestments make the convergence process to the desired long run composition of capital stock lengthy because sooner or later corrective investments have to be undertaken.
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