The Effect of an Increase in Capital Stock on the Rental on Capital By carefully tracing through how the capital–labor ratio in manufacturing is affected by the movement from A to C (where wages and hence the capital–labor ratio do not change), and then the movement from C to B (where wages and the capital–labor ratio both increase), we conclude that the rental on capital is lower at point B than at point A. Therefore, the rental on capital declines when the capital stock increases through FDI.