In real life, increasing your production capacity often costs you money. So you have to use your production capacity to pay for increasing your production capacity.

Then, there is the uncertainty. (You spend 30 years increasing your production capacity, and then a technological change makes your existing capacity obsolete. Or you die in accident.)

Then, there is the problem of realistic human motivation, and of signalling to others. (How would you convince you have a superior production capacity, when I never saw you produce anything?)

Then, there are conflicts and the first-mover advantage. (Your production capacity is conquered by an enemy who decided to produce sooner.)

Some of these may or may not apply in specific scenarios.