Economic Growth and Capital Formation

Economic growth is fundamentally driven by capital formation - the accumulation of productive assets, machinery, infrastructure, and investment. This is based on standard economic growth theories (Solow model, Harrod-Domar model). Technical progress globally does not necessarily benefit country X. Population growth alone without capital formation leads to per capita decline. World trade growth benefits individual countries unevenly. Only capital formation in country X itself ensures its economic growth. > Capital formation - investment in productive assets - is the necessary and sufficient condition for endogenous economic growth within a country. Answer: (c).