At the time of its independence in 1947, India was a very poor country with a very small stock of physical capital. Between 1947 and 1980, the government of India believed that the best way to improve the standard of living in that country was to increase investment and create more jobs with the existing technology.

At the time of its independence in 1947, India was a very poor country with a very small stock of physical capital. Between 1947 and 1980, the government of India believed that the best way to improve the standard of living in that country was to increase investment and create more jobs with the existing technology. Importing advanced technology and encouraging cost-saving innovations were seen as unnecessary because the government believed that such developments would reduce the need for labor and contribute to unemployment. Other things equal, the consequence of this policy for the long-run growth of the economy must have been: