Restoring America's Lagging Investment in Capital Goods
THE INFORMATION TECHNOLOGY INNOVATION FOUNDATION OCTOBER 2013 Investment in new equipment and software is the primary means through which innovation the key driver of economic growth diffuses throughout the economy. Without new capital investment refreshing a nation's capital stock, innovation loses its power, productivity growth stagnates, and national economic competitiveness declines. It is troubling, then, that over the past decade, business investment rates in the United States have stagnated. Between 1980 and 1989, business investment in equipment, software and structures grew by 2.7 percent per year on average and 5.2 percent per year between 1990 and 1999. But between 2000 and 2011 it grew by just 0.5 percent per year less than a fifth of that of the 1980s and less than one tenth that of the 1990s. Moreover, as a share of GDP, business investment has declined by more than three percentage points since 1980.