Business investment in the face of the digital transformation: Initial evidence

This paper analyses business investment performance across OECD economies, highlighting the pivotal role of digital assets such as hardware, software and databases. Using disaggregated national accounts data by asset and sector, it shows that digital investment has outpaced other forms of investment, with a marked acceleration since the mid-2010s. Digital investment plays an important role in explaining total business investment dynamics, in particular the strong performance of the United States relative to other OECD economies over the past decade. This strength in digital investment has translated into faster accumulation of digital capital than other asset types, despite high depreciation, while digital capital per worker varies widely across countries. These findings are robust to key measurement considerations, including alternative price deflators for digital assets and accounting for rented digital services, and do not appear driven solely by a few large technology firms. The paper also sets out an agenda for further work on the structural and policy drivers of digital investment, as the rapid diffusion of artificial intelligence and related technologies suggests that digital capital is poised to become an ever more central driver of productivity growth.