The Capital Productivity

Carlos Feu Alvim
<feu@ecen.com>
English version: Frida Eidelman

 

Overview
Investments and Growth in Japan, Korea and Brazil
Capital as Limitation to Economic Growth
How to Evaluate the Capital /Product Ratio or Capital Productivity
Evolution of the Capital/Product in some Countries
Investments Necessary for Growth
Impositions of the Global Economy and Reduction of Capital Productivity
Tables : Capital/Product Ratio

 

Overview

In the concern about productivity, which is one of the characteristics of the present global economy phase, the capital factor is usually not included.

Previously (Brasil : Crescimento Possível/Bertrand 1996) we have pointed out the capital productivity as an important limiting factor to Brazilian growth in the coming years. An evaluation for 15 countries, based on data published by the IMF, shows that the phenomenon is worldwide.

Japan, for example, reaches only half of the growth it obtained in the sixties investing the same 30% of the GNP. Korea, to grow 10% of the GNP, had to increase investments from 25% to 35% of the GNP.

The growth of manpower productivity, often praised by the media(*), may reflect only a substitution of production factor and may be correlated to the loss of capital productivity. Incidentally, it is common to have the productivity growth, referred only to manpower, indicated by the media as the productivity index for industry.

The new production contingencies relative to environment, to energy saving, to petroleum substitution, besides automation, may be contributing to the decrease of capital Productivity .

 

(*) Productivity established a record in 96: results consider growth of 1.5% in industrial productivity and decrease of 9% in employment - O Globo/Caderno Economia o6/Dec/96 - More productuion and less jobs : electronic goods establish record in sales and less 100 thousand jobs since 1990 - Gazeta Mercantil 07/Dec/96.

Investments and Growth in Japan, Korea and Brazil

In the beginning of the sixties Japan had an investment, measured by the gross formation of fixed capital, of about 30% of the GNP and grew 10% a year For the same investment of 30% of the GNP, at the start of the eighties, Japan could grow only 4,5% a year. This picture seems to maintain itself in the beginning of the present decade.


Korea, which has been growing regularly about 9% a year since the mid seventies, had to raise its annual investment from 24% of the GNP at that period to 35% of the GNP in the beginning of the nineties.



Brazil, which in the fifties grew about 7% investing 15% of the GNP and in the beginning of the seventies grew more than 10% a year investing about 20% of the GNP, since 1980 could only grow about 3% a year investing 23% of the GNP (current prices).


These data denote that economic growth evolved to demand increasing investments relative to the GNP or, in other words, there was a reduction of the capital productivity.

Top Next Main Document

Capital as Limitation to Economic Growth
How to Evaluate the Capital /Product Ratio or Capital Productivity
Evolution of the Capital/Product in some Countries
Investments Necessary for Growth
Impositions of the Global Economy and Reduction of Capital Productivity
Tables : Capital/Product Ratio