How Economic Growth Is Possible With Capital Accumulation?

Malthus forecast was dramatically wide of the mark because he did not recognize that technological innovation and capital investment could overcome the law of diminishing returns. Land did not become the limiting factor in production. Instead, the Industrial Revolution brought forth power driven machinery that increased production, factories that gathered terms of workers into giant firms, railroads and steamships that linked together the far points of the world, and iron and steel that made possible stronger machines and faster locomotives. As market economies entered the twentieth century, important new industries grew up around the telephone, the automobile, and electric power. Capital accumulation and new technologies became the dominant force affecting economic development.

To understand how capital accumulation and technological change affect the economy, we must understand the neoclassical model of economic growth. Robert Solow of MIT, who was awarded the 1987 Noble Prize for this and other contributions to economic growth theory, pioneered this approach. The neoclassical serves as the basic tool for understanding the growth process in advanced countries. I think this explanation is enough to satisfy your question.