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Existing empirical studies have focused on determinants of investment. We focus instead on episodes of accelerated capital stock growth that last eight years or longer. We find that episodes are relatively common, even in low growth regions, but more so in middle income and Asian countries. After identifying 175 such episodes between 1950-2014, we employ probit analysis to explore their characteristics. Turning points in investment tend to be preceded by undervalued real exchange rates, macroeconomic stability (low inflation), and net capital outflows (especially portfolio outflows). We also find strong evidence for a negative correlation with the capital to output ratio and per capita GDP, and a positive correlation with a human capital index. Investment surges appear to be associated with accelerated structural change in the economy.



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