Rates of Reproduction and the Structure of Capital Investment

Abstract

The efficacy of the productive mechanism, its efficiency, is heightened with the expansion of its working component - machinery. Modern trends in technical progress are reducing the size of machinery per unit of its productive capacity and thereby are modifying the ratio of outlays for buildings to outlays for equipment. The economic significance of this change in the technological structure of capital investment (1) is that it helps to reduce thecapital- output ratio, which is one of the principal factors in increasing the rate of expansion of social production. Tentative estimates indicate that under modern conditions an increase of one point in the share of machinery and other equipment in the aggregate industrial investment in the USSR would raise the annual volume of industrial output by 5 to 6 billion rubles.