Despite being a high saving economy, capital formation may not result in significant increase in output due to

The correct option is High capital-output ratio.

Step-by-step Explanation:

1. Understanding Capital Formation and Output:
Capital formation refers to the net addition of physical assets such as equipment, buildings, machinery, and infrastructure in an economy. Higher savings generally lead to higher investment, which boosts capital formation with the aim of increasing economic output (GDP).

2. What is the Capital-Output Ratio?
The Capital-Output Ratio (COR) measures the amount of capital required to produce one unit of economic output. Mathematically, it can be represented as:

$\text{Capital-Output Ratio}=\frac{\text{Capital Invested}}{\text{Output Produced}}$

3. Impact of a High Capital-Output Ratio:
A high capital-output ratio indicates economic inefficiency. It means that a large amount of capital investment is required to generate a relatively small increase in output. Therefore, even if an economy has high savings and high rates of capital formation, if the capital-output ratio is high, the resulting increase in output will remain low or insignificant.

4. Evaluating Other Options:
While weak administrative machinery, illiteracy, and high population density can present socio-economic challenges, the direct economic factor that determines why high capital formation fails to translate into high output growth is the high capital-output ratio.