Investment trends in post-reforms India

Lawrence lawrence at krubner.com
Fri Aug 24 11:47:14 PDT 2001


From: "Ulhas Joglekar" <uvj at vsnl.com>
> This line of reasoning used the argument that high ICORs (incremental
> capital output ratios) which were observed in India essentially reflected
> high costs and inefficiency of resource use, which would be corrected by
the
> liberalising regime. This in turn, it was argued, would mean that higher
> growth would result even from the same rate of investment, as ICORs would
> fall across sectors

That's interesting. I thought developed countries like America suffered from a law of diminishing returns when it came to capital output. Also the cost of technology development. We have to spend so much to keep going forward, simply because we're already so wealthy, and all progress at this point takes a lot of research and investment. And I always assumed that Third World countries had it easier since they rarely if ever pay the full cost of development on imported technology. That's what I thought anyway. But then there is this, and Fortune magazine last year had an article that said America had the highest return on investment in the world, suggesting efficient use of capital in this country. I guess things are the exact opposite of what I'd thought?



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