Empirical facts have proved the futility of a development strategy directly aiming at upgrading the industrial and technological structure. The reason is that artificially upgrading the industry and technology structure defies the comparative advantage determined by the existing endowment structure and will result in distortions and low efficiency. So, to upgrade that structure and ensure the maximum efficiency, the cause – the factor endowment structure – must be changed.

Factor endowment refers to an economy's relative abundance in capital, labor, land, and natural resources. Usually land and natural resources are given, for countries can no longer have colonies in foreign lands, as in the eighteenth and nineteenth centuries. The gap between labor growth in developing and developed countries is minimal: labor growth in developing countries is usually 2–3 percent, and that in developed countries is also above zero. The major difference comes from capital accumulation. For some countries, the rate is as high as 30–40 percent, but for others, it is less than 10 percent.

So, upgrading the endowment structure refers to increasing the relative abundance of capital. For any production period the factor endowment structure determines the sum of the resources, capital, and labor available to an economy and the relative prices of capital and labor. In the longer term the endowment structure can change with changes in population and capital accumulation. And the capital accumulation rate determines the upgrading of the factor endowment structure.