Economic Overextension Theory

Economic Overextension Theory suggests that economies grow rapidly by taking on excessive debt, investments, or expansion beyond sustainable levels. This overspending can lead to vulnerabilities, such as financial instability or recession, when the growth slows or external shocks occur. Essentially, it highlights the risks of overly ambitious expansion without sufficient safeguards, emphasizing that unchecked growth can set the stage for economic downturns once the excesses are pruned or uncontrollable factors emerge.