Low capital use in poor economies hinders long-term productivity growth.
The article explores how using capital efficiently affects a country's long-term productivity. It suggests that poor economies may not use their capital optimally due to underlying issues. By incorporating variable capital utilization into a common economic model, the study finds that countries with lower capital utilization rates tend to converge at a slower pace towards higher productivity levels. This means that controlling for capital utilization can change the results of traditional growth and productivity analyses.