382 PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - 28

the period of production, in the case where ®,6=4, is only of
the order of 36%, the difference i - p being some 25%.
It is only for capital-output ratios below 1.5, i.e. very low
ones indeed, that gains of real income could be very appreciable:
 but in any case for which estimates has been available
 no such low values of yc have been met.
Clearlv it follows that:

r) developed economies have relatively little to gain from an
increase in Savings,
2) that less developed countries, on the contrary, can realise
substantial gains from greater savings efforts when the marginal
 productivity of capital is very high, but that these
gains are however not as large as is generally believed.

Significance of the Results Obtained

411. It can thus be seen that the real income gains which
can be had by lengthening the average duration of the capitalistic
 process are in general overestimated, not to sav considerably
 overestimated.
But a basic assumption of the model should be borne in
mind when making this interpretation. This is that there is
optimum management in all the situations considered, implying
that existing savings are utilised in the best possible way.
‘Paretian optimum hypothesis) (1).
This being so, although the results derived above show
that greater savings would not be very advantageous in an
economy in which there is optimum management, they in
no way imply that increased savings would not be very productive
 if savings already accumulated had in the past been
invested in mistaken directions.

(1!)
§
II7

"111 Allais - pag. 186