Capital Investment Versus Utilization in Business Performance and Economic Growth

Abstract

Critical review of investment-economic performance literatures in economics and strategic management indicates that more capital investment does not seem to contribute to higher national economic growth or to higher corporate profitability. Instead, greater utilization of capital and human resources does seem to contribute to economic performance.

Keywords: Investment ratio and rate, Capital intensity, Capacity utilization, Employment, Neoclassical economic theory, National economic growth, Corporate profitability, Cross-national panel analysis, Time-series national analysis, Causal inference, Managerial and governmental decision-making

JEL Classification: C21, C22, C23, D24, E13, E22, E23, E24, L25, O16