Decline in capital investment in productive capacity


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.

Related UN Sustainable Development Goals:
GOAL 8: Decent Work and Economic GrowthGOAL 17: Partnerships to achieve the Goal
Problem Type:
E: Emanations of other problems
Date of last update
04.10.2020 – 22:48 CEST