Economists believe that the development of a new technology provides a way for an economy to sidestep the diminishing marginal returns of capital deepening. What is the reason behind such belief?

The ability of capital deepening by itself to generate sustained economic growth is limited, since diminishing returns will eventually set in. However, countries can still experience large increases in growth due to technological innovations. Improvements in technology shift the aggregate production function and therefore allow more output per unit of capital. With the combination of technology and capital deepening, the rise in per capita GDP in high-income countries does not need to fade away because of diminishing returns. The gains from technology can offset the diminishing returns associated with capital deepening.