PRODUCTIVITY GROWTH AND MACHINERY INVESTMENT - A LONG-RUN LOOK, 1870-1980

Over the past century in six major economies, economic growth has been strongly associated with machinery investment, as is the case for a larger group of nations since 1950. Both macroeconomic patterns and narratives of the history of technology suggest that this association is causal-that a high rate of machinery investment appears to be a necessary prerequisite for rapid long-run growth-and points away from possibilities that rapid growth is the cause of high machinery investment or that a high rate of machinery investment is it good proxy for other factors that are important causes of growth.