<p>The key to the answer is good data on Capital. There is a project (<a href="http://www.worldklems.net/data.htm" rel="nofollow noreferrer">KLEMS</a>), which is computing harmonised (i.e. comparable) information on capital, labour, energy, etc for many countries. At the moment it has information mainly on developed countries, but data for more developing countries are coming up. </p>

<p>For example, this is a calculation of the capital-output ratio for the case of the UK:</p>

<p><a href="https://i.sstatic.net/kPcpx.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/kPcpx.png" alt="enter image description here"></a></p>

<p>For the case of developing countries, here is a figure:</p>

<p><a href="https://i.sstatic.net/LgbyI.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/LgbyI.png" alt="enter image description here"></a></p>

<p>(source <a href="http://www.oecd-ilibrary.org/development/economic-outlook-for-southeast-asia-china-and-india-2014/policy-priorities-for-growing-beyond-the-middle-income-trap-in-emerging-asia_saeo-2014-9-en" rel="nofollow noreferrer">here</a>)</p>

<p>It seems that developing countries might have lower capital-output ratios. However, this is ultimately an empirical question which requires a proper analysis. I suggest you use the KLEMS data to make your own, harmonised study.</p>

CC BY-SA 3.0
2017-04-12T14:58:58.400Z
2017-04-12T14:58:58.400Z
luchonacho
<p>For a developing economy, I've seen sources claiming that the capital-output ratio (more commonly known as ICOR) is high (e.g. <a href="http://ahsankhaneco.blogspot.com/2012/04/basic-major-and-common-characteristics.html" rel="nofollow noreferrer">here</a> and <a href="https://www.quora.com/What-is-capital-output-ratio" rel="nofollow noreferrer">here</a>), while other sources claiming that it's low, like below (the answer is A):</p>

<p><a href="https://i.sstatic.net/NNUkR.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/NNUkR.png" alt="enter image description here"></a></p>

<p>I suppose I can come up with reasons why the ICOR or a developing country might be low: low rate of saving -> little investment on capital -> low returns -> low ICOR. Then again, the ICOR is a ratio, so even if both nominal investment and output are low, there is no guarantee that they're values are therefore low relative to each other, if anything the ICOR can easily be high, as explained in the two sources that claim the ICOR is high for such economies.</p>

CC BY-SA 3.0
2017-04-12T14:36:14.417Z
Which is the source of the table?
luchonacho
CC BY-SA 3.0
2017-04-12T14:53:29.787Z
@luchonacho the table comes from an A level Cambridge International Examination exam question.
tsp216
CC BY-SA 3.0
2017-04-13T12:30:20.857Z
Capital-output ratio and incremental capital-output ratio are not the same.  Indeed, the difference is explained in your second link.
Adam Bailey
<development-economics><input-output><capital>
Is the capital-output ratio in developing countries low or high?
tsp216
# Is the capital-output ratio in developing countries low or high?

(Asked by: username_0 on 2017-04-12)

For a developing economy, I've seen sources claiming that the capital-output ratio (more commonly known as ICOR) is high (e.g. [here](http://ahsankhaneco.blogspot.com/2012/04/basic-major-and-common-characteristics.html) and [here](https://www.quora.com/What-is-capital-output-ratio)), while other sources claiming that it's low, like below (the answer is A):

[![enter image description here](https://i.sstatic.net/NNUkR.png)](https://i.sstatic.net/NNUkR.png)

I suppose I can come up with reasons why the ICOR or a developing country might be low: low rate of saving -> little investment on capital -> low returns -> low ICOR. Then again, the ICOR is a ratio, so even if both nominal investment and output are low, there is no guarantee that they're values are therefore low relative to each other, if anything the ICOR can easily be high, as explained in the two sources that claim the ICOR is high for such economies.

**Tags:** development-economics, input-output, capital
> **Comments:**
> **username_1**: Which is the source of the table?  
> **username_0**: @luchonacho the table comes from an A level Cambridge International Examination exam question.  
> **username_2**: Capital-output ratio and incremental capital-output ratio are not the same.  Indeed, the difference is explained in your second link.  

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## 1 answers

### Answer by username_1 on 2017-04-12. Score: 1 | Accepted answer

The key to the answer is good data on Capital. There is a project ([KLEMS](http://www.worldklems.net/data.htm)), which is computing harmonised (i.e. comparable) information on capital, labour, energy, etc for many countries. At the moment it has information mainly on developed countries, but data for more developing countries are coming up.

For example, this is a calculation of the capital-output ratio for the case of the UK:

[![enter image description here](https://i.sstatic.net/kPcpx.png)](https://i.sstatic.net/kPcpx.png)

For the case of developing countries, here is a figure:

[![enter image description here](https://i.sstatic.net/LgbyI.png)](https://i.sstatic.net/LgbyI.png)

(source [here](http://www.oecd-ilibrary.org/development/economic-outlook-for-southeast-asia-china-and-india-2014/policy-priorities-for-growing-beyond-the-middle-income-trap-in-emerging-asia_saeo-2014-9-en))

It seems that developing countries might have lower capital-output ratios. However, this is ultimately an empirical question which requires a proper analysis. I suggest you use the KLEMS data to make your own, harmonised study.


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