2
the 1970s. For their projections for the year 2000 they employ ICORS of 4.0, 4.5 and 5.5 in line with investment shares of about 30% and growth rates in the range 5-7.5%.
7. For the estimates made above and in the despatch to reflect changes in investment efficiency, it is essential that existing capital is not used more fully, or that sectors with very low capital employed do not expand more quickly than the average. If this is the case, then the increase in output in a particular year is due not just to new investment, but to higher rates of utilisation of existing capital. The ICOR is then a misleading measure, capturing the taking-up of slack and more rapid growth in sectors such as agriculture. This has occurred in China between 1981 and 1984 with improved efficiency of use of the existing capital stock. As growth rates fall to a sustainable level (as appears to be happening in 1986) the measured ICOR will rise to its trend levels of around 5 (in terms of HMA's terminology, a marginal productivity of capital of around 0.2).