AK model

The AK model is a basic economic growth model emphasizing that investment in capital (like machinery or infrastructure) drives long-term economic development. "A" represents productivity, showing how efficiently capital generates output, while "K" stands for the capital stock. Unlike other models with diminishing returns, the AK model assumes constant returns to capital, meaning each additional unit of capital continues to produce similar increases in output. This suggests that sustained growth depends on continuous investment and technological progress, making capitalism and ongoing investment critical for long-term economic expansion.