Capital Market Expectations

CFA Level III Economics
#1

High rates of growth in capital investment are associated with high rates of growth in the economy.

However, these high growth rates are not necessarily linked to favorable equity returns as equity return is related to the rate of return on capital. For example, if the rate of growth of capital is faster than the rate of economic growth, return on capital and equity returns may be less attractive.

Above 2 sentences are written in the schweser. Could anyone please explain me what does the 2nd paragraph means? As I am not able to create a link here. Thanks

#2

if capital investment is high in your country but is just sitting around as excess capacity, then the return on the larger amount of K is lower

#3

I read that sentence and assumed it was Schweser.