ABSTRACT
Many of the models of economic growth which have been developed in the post war period have been concerned with the implications of the capacity-creating effects of investment expenditure for the level and rate of growth of national income. This was the natural next step to take, once the Keynesian questions about the employment-creating effects of investment expenditure in the short run had been answered. Unfortunately, most of these models either ignore, or do not take sufficient account of, the following features of advanced industrial economies:
1 Manufacturing firms are usually price-makers rather than price-takers. 2 Capital goods, once created, are specific, not malleable, so that responses to
both technical progress and changes in relative factor prices can occur only as additions, at the margin, to existing capital stocks.
