Final answer:
Investment does not always result in higher economic growth rates, as the impact may vary depending on the country's level of development and existing capital investment. Higher-income countries tend to experience diminishing returns from additional investment, while lower-income countries can benefit more significantly from new capital and technological innovation.
Step-by-step explanation:
The relationship between a higher level of investment and economic growth rate is not always straightforward. While investment can contribute to economic growth, the impact may vary depending on the level of development and existing capital investment in a country. In low-income countries, an increase in investment can lead to significant gains in productivity and growth, as the new capital is combined with the labor force. However, in higher-income countries, the marginal gain from additional investment tends to be less pronounced due to diminishing returns. Moreover, higher-income countries often rely on continuous technological innovation to counterbalance the diminishing returns to investments in human and physical capital.