The New Palgrave Dictionary of Economics

Living Edition
| Editors: Matias Vernengo, Esteban Perez Caldentey, Barkley J. Rosser Jr

Absorptive Capacity

Living reference work entry


The idea that the productivity of new investment is a declining function of the rate of investment – the concept labelled ‘absorptive capacity’ – has attracted attention in development economics because of its implications as a constraint on growth.


Absorptive Capacity Adjustment Cost Aggregate Consumption Efficient Investment Aggregate Utility 
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