Transformation in Production Technology and the Dynamics of Corporate Investment
66 Pages Posted: 14 Feb 2015 Last revised: 28 Dec 2020
Date Written: December 18, 2019
Capital expenditures of U.S. public firms, relative to total assets, decrease by more than half from 1980 to 2016. The decline is pervasive across industries and firms of different characteristics, and cannot be explained by the usual determinants of investment and many other seemingly plausible reasons. The decline is consistent with the transformation in production technology – firms rely more on intangible capital and less on fixed assets in production. Industry-level analyses yield supporting evidence. We observe similar declining trend in capital expenditure in other developed countries but not in emerging markets.
Keywords: Corporate investment, capital expenditure, intangible capital, firm production, economic globalization
JEL Classification: D22, G30, G31
Suggested Citation: Suggested Citation