IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/3515.html
   My bibliography  Save this paper

Equipment Investment and Economic Growth

Author

Listed:
  • J. Bradford De Long
  • Lawrence H. Summers

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 l9&)?l95 each percent of GDP invested in equipment is associated with an increase in GDP growth of 1/3 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.

Suggested Citation

  • J. Bradford De Long & Lawrence H. Summers, 1990. "Equipment Investment and Economic Growth," NBER Working Papers 3515, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:3515
    Note: EFG
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w3515.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. repec:fth:harver:1532 is not listed on IDEAS
    3. Krueger, Anne O, 1990. "Government Failures in Development," Journal of Economic Perspectives, American Economic Association, vol. 4(3), pages 9-23, Summer.
    4. Jorgenson, Dale W, 1988. "Productivity and Postwar U.S. Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 2(4), pages 23-41, Fall.
    5. Bates, Robert, 1981. "Markets and States in Tropical Africa: The Political Basis of Agricultural Policies," MPRA Paper 86293, University Library of Munich, Germany, revised 2005.
    6. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    7. David, Paul A., 1977. "Invention and accumulation in america's economic growth: A nineteenth-century parable," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 6(1), pages 179-228, January.
    8. Dale W. Jorgenson, 1991. "Productivity and Economic Growth," NBER Chapters, in: Fifty Years of Economic Measurement: The Jubilee of the Conference on Research in Income and Wealth, pages 19-118, National Bureau of Economic Research, Inc.
    9. Abramovitz, Moses, 1986. "Catching Up, Forging Ahead, and Falling Behind," The Journal of Economic History, Cambridge University Press, vol. 46(2), pages 385-406, June.
    10. Romer,Paul M, 1989. "What determines the rate of growth and technological change?," Policy Research Working Paper Series 279, The World Bank.
    11. David S. Litvack & Jimming T.M. Lin & Jennie I. Litvack & Robert B. Satloff, 1990. "World," Challenge, Taylor & Francis Journals, vol. 33(2), pages 59-59, March.
    12. Moses Abramovitz, 1956. "Resource and Output Trends in the United States since 1870," NBER Books, National Bureau of Economic Research, Inc, number abra56-1, May.
    13. Moses Abramovitz, 1956. "Resource and Output Trends in the United States since 1870," NBER Chapters, in: Resource and Output Trends in the United States since 1870, pages 1-23, National Bureau of Economic Research, Inc.
    14. Abramovitz, Moses & David, Paul A, 1973. "Reinterpreting Economic Growth: Parables and Realities," American Economic Review, American Economic Association, vol. 63(2), pages 428-439, May.
    15. repec:fth:harver:1487 is not listed on IDEAS
    16. Robert Summers & Alan Heston, 1988. "A New Set Of International Comparisons Of Real Product And Price Levels Estimates For 130 Countries, 1950–1985," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(1), pages 1-25, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ian W. McLean & Alan M. Taylor, 2001. "Australian Growth: A California Perspective," NBER Working Papers 8408, National Bureau of Economic Research, Inc.
    2. Chad Turner & Robert Tamura & Sean Mulholland, 2013. "How important are human capital, physical capital and total factor productivity for determining state economic growth in the United States, 1840–2000?," Journal of Economic Growth, Springer, vol. 18(4), pages 319-371, December.
    3. J. Bradford DeLong & Lawrence H. Summers, 1992. "Macroeconomic policy and long-run growth," Economic Review, Federal Reserve Bank of Kansas City, vol. 77(Q IV), pages 5-29.
    4. Johanna Vogel, 2015. "The two faces of R&D and human capital: Evidence from Western European regions," Papers in Regional Science, Wiley Blackwell, vol. 94(3), pages 525-551, August.
    5. Alan M. Taylor, 1995. "Growth and Convergence in the Asia-Pacific Region: On the Role of Openness, Trade and Migration," NBER Working Papers 5276, National Bureau of Economic Research, Inc.
    6. Ark, Bart van, 1999. "Accumulation, productivity and technology: measurement and analysis of long term economic growth," CCSO Working Papers 199908, University of Groningen, CCSO Centre for Economic Research.
    7. Michaelides, Panayotis & Milios, John, 2009. "TFP change, output gap and inflation in the Russian Federation (1994-2006)," Journal of Economics and Business, Elsevier, vol. 61(4), pages 339-352, July.
    8. Angus Maddison, 1997. "Causal Influences on Productivity Performance 1820–1992: A Global Perspective," Journal of Productivity Analysis, Springer, vol. 8(4), pages 325-359, November.
    9. Ayres, Robert U, 2001. "The minimum complexity of endogenous growth models:," Energy, Elsevier, vol. 26(9), pages 817-838.
    10. J. Bradford De Long, "undated". "Productivity and Machinery Investment: A Long Run Look 1870-1980," J. Bradford De Long's Working Papers _118, University of California at Berkeley, Economics Department.
    11. Bayraktar-Sağlam, Bahar & Yetkiner, Hakan, 2014. "A Romerian contribution to the empirics of economic growth," Journal of Policy Modeling, Elsevier, vol. 36(2), pages 257-272.
    12. Fagerberg, Jan & Srholec, Martin & Verspagen, Bart, 2010. "Innovation and Economic Development," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 833-872, Elsevier.
    13. Van Elk, Roel & Verspagen, Bart & Ter Weel, Bas & Van der Wiel, Karen & Wouterse, Bram, 2015. "A macroeconomic analysis of the returns to public R&D investments," MERIT Working Papers 042, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    14. David, P.A., 1989. "Computer And Dynamo: The Modern Productivity Paradox In A Not-Too Distant Mirror," The Warwick Economics Research Paper Series (TWERPS) 339, University of Warwick, Department of Economics.
    15. Thais Andreia Araujo Souza & Marina Silva Cunha, 2018. "Performance of Brazilian total factor productivity from 2004 to 2014: a sectoral and regional analysis," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 7(1), pages 1-18, December.
    16. Greasley, David & Oxley, Les, 1998. "Comparing British and American Economic and Industrial Performance 1860-1993: A Time Series Perspective," Explorations in Economic History, Elsevier, vol. 35(2), pages 171-195, April.
    17. G. Medda & C. Piga, 2004. "R&S e spillover industriali: un'analisi sulle imprese italiane," Working Paper CRENoS 200406, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    18. Jones, C.I., 2016. "The Facts of Economic Growth," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 3-69, Elsevier.
    19. Jens Kaüger & Uwe Cantner & Horst Hanusch, 2000. "Total factor productivity, the east Asian miracle, and the world production frontier," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(1), pages 111-136, March.
    20. Malcolm Abbott, 2018. "Productivity: a history of its measurement," HISTORY OF ECONOMIC THOUGHT AND POLICY, FrancoAngeli Editore, vol. 2018(1), pages 57-80.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:3515. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.