Despite being a high saving economy capital formation may not result in significant increase in outp...........

Economic Affairs Growth and Indicators

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Despite being a high saving economy, capital formation may not result in significant increase in output due to

Weak administrative machinery

Illiteracy

High population density

High capital-output ratio

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Explanation:

Justification: Option D: Capital-output ratio (COR) basically indicates the amount of capital required to produce one unit of output.
For e.g. if 5 units of capital (machinery) is used to produce only 1 unit of cloth instead of the ideal requirement of only 2 units of capital (machinery) then we can say that the production is inefficient.
If COR is high, despite saving high and generating enough capital, our output may not grow significantly because the COR is high. This may be a result of poor technology or poor management.
It is also represented by the famous economic model called as Harod-Domar Model where G x c = S
Here G = Growth, C= ICOR or incremental capital output ration and S= Savings
So, clearly with high savings growth or output may remain low because of high capital- output ratio