Decline in capital investment in productive capacity
Nature: When demand is deficient firms tend to restrict their investment to that needed for rationalization, increasing efficiency and reducing current labour and material costs in order to maintain their market shares, rather than enlarge capacity. This serves to increase productivity, but it reduces employment, and does not add to potential output.
Problem Type: E: Emanations of other problems
Date of last update 01.01.2000 – 00:00 CET