Economic Calculation and the Productivity of Investment
-
Benjamin Powell
and
Gonzalo Macera
Abstract
This paper explains why institutional quality impacts the productivity of investment. The existing empirical literature finds that a given level of investment creates more economic growth in more economically free countries. We draw on insights from Austrian economics, particularly the economic calculation debate and associated knowledge problems, to provide a theoretical explanation for why entrepreneurs are able to better value investment opportunities in more economically free countries which, in turn, leads to higher economic growth.
Acknowledgments
We thank the participants at the JBVELA conference hosted by Texas Tech’s Free Market Institute for helpful comments on an earlier draft of this paper.
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Articles in the same Issue
- Private Governance and the Pricing of Political Enterprises
- Investment in New Proved Oil Reserves: An Austrian Perspective
- Economic Calculation and the Productivity of Investment
- Incorporating Social Capital into the Austrian Business Cycle Theory
- Austrian Economics, Market Process, and the EVA® Framework
- Capital Valuation, What is it and Why does it Matter? Insights from Austrian Capital Theory
- Adversarial versus Inquisitorial Systems: Error and Valuation
Articles in the same Issue
- Private Governance and the Pricing of Political Enterprises
- Investment in New Proved Oil Reserves: An Austrian Perspective
- Economic Calculation and the Productivity of Investment
- Incorporating Social Capital into the Austrian Business Cycle Theory
- Austrian Economics, Market Process, and the EVA® Framework
- Capital Valuation, What is it and Why does it Matter? Insights from Austrian Capital Theory
- Adversarial versus Inquisitorial Systems: Error and Valuation
