Quarterly Journal of Economics Vol. 106 No. 2 1991

Equipment Investment and Economic Growth

J. Bradford De Long^1,2,3,4; Lawrence H. Summers^1,2

¹ National Bureau of Economic Research · ² Harvard University · ³ Federal Reserve Bank of San Francisco · ⁴ University of California, Berkeley

Abstract

Using data from the United Nations Comparison Project and the Penn World Table, we find that machinery and equipment investment has a strong association with growth: over 1960–1985 each extra percent of GDP invested in equipment is associated with an increase in GDP growth of one third of a percentage point per year. This is a much stronger association than found between growth and any of the other components of investment. A variety of considerations suggest that this association is causal, that higher equipment investment drives faster growth, and that the social return to equipment investment in well-functioning market economies is on the order of 30 percent per year.

DOI

10.2307/2937944

Volume

106

Issue

2

Pages

445

Sources

crossref openalex

Cite

APA 7 MLA 9 Chicago (author–date) Harvard Elsevier Harvard (JFE, JBF…) The Accounting Review Academy of Management American Marketing Association INFORMS (Management Science) Copy citation Copied ✓