The output accumulated by capital can either be reinvested into further production or consumed—always one or the other. For simplicity, again, let’s assume that savings (s) is equal to investment (I); there is no idle money in the country, and the ratio of capital is a constant ratio. One will see that the ratio of investment will grow with capital accumulation. Does this mean an endless loop of accumulation and reinvestment? If that were the case, developed countries would always display higher growth rates than their developing counterparts, which does not happen. That is because depreciation (δ) “eats away” at the value of physical capital as the capital wears out from repeated use, just like a tractor or a highway would after many years of use. If we assume a constant rate of depreciation, when combined with the diminishing returns of capital, the country will only keep growing if it augments its physical capital. In developed countries, there is very little margin to add more infrastructure, as most of the land available for production may already be in use.