With fixed recipes, adding more physical capital runs into diminishing returns—the way a distribution center gains huge value from the first forklift but almost none from the fiftieth—which is why economies like the Soviet Union that tried to grow purely through heavy capital investment with essentially no innovation grew briefly then rapidly stalled.

causalpending

Speaker

Paul Romer

Evidence Quote

economies which try to grow by just adding more and more forklifts, eventually run into serious trouble. The Soviet Union tried to grow like that for a while with essentially no innovation

Source

Paul Romer on Growth 8/27/2007EconTalk
Created: 6/16/2026, 2:38:24 PM

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