However, there is widespread agreement that higher economic and employment growth on a sustained basis would require stronger capital formation. Currently the ratio of fixed capital formation to gross domestic product is around 17 per cent, and the real fixed capital stock is growing by 2 per cent per annum.
It is calculated that this ratio should ideally rise to 22 per cent in order to boost the rate of growth in the capital stock to 4½ to 5 per cent per year – as seems necessary in order to sustain a real growth rate of around 6 per cent.