Economic Growth and the Investment Decision

[afranks1]

Hello
I have seen the following 2 statements in the Schweser books and was wondering if someone could clarify no. 1. How can a developed country have a high capital to labour ratio but then low share of capital output as well?
1. Developed markets typically have a high capital to labour ratio and a lower alpha (share of capital output) as compared to developed markets.
2. Developing countries have a lower level of capital per worker.

 

[FI_Trader]

From what I understand you have to look at alpha as the share of output allocated to growing capital (K). Because developed counries already have a high capital to labor ratio (K/L) and alpha is less than one (meaning there are diminishing returns for each amount of capital added) developed countries gain less and less benefit from “capital deepening” (adding to K), meaning a smaller and smaller share of output (alpha) is going to be allocated to capital deepening as a country becomes more and more developed.