In the context of a macroeconomic exogenous growth model, for example, it says that if an infinite optimal path is calculated, and an economic planner wishes to move an economy from one level of capital to another, as long as the planner has sufficient time, the most efficient path is to quickly move the level of capital stock to a level close to the infinite optimal path, and to allow capital to develop along that path until it is nearly the end of the desired term and the planner must move the capital stock to the desired final level.
Although the idea can be traced back to John von Neumann in 1945,[1] Lionel W. McKenzie traces the term to Robert Dorfman, Paul Samuelson, and Robert Solow's Linear Programming and Economic Analysis in 1958, referring to an American English word for a Highway: Thus in this unexpected way, we have found a real normative significance for steady growth—not steady growth in general, but maximal von Neumann growth.
But if the origin and destination are far enough apart, it will always pay to get on to the turnpike and cover distance at the best rate of travel, even if this means adding a little mileage at either end.
In general equilibrium, the variation which involves infinite capital accumulation paths can be applied.
He empirically implemented the theorem using actual input-output data for Japan, and the resulting model was used for planning purposes by the Japanese government.