Rising Digital Investment Transforming Business Capital Across OECD Nations

An OECD study finds that business investment in digital technologies such as software, data and ICT equipment has grown rapidly across advanced economies, becoming a major driver of productivity and economic growth. The United States leads this trend, with stronger digital investment explaining much of its advantage in overall business investment compared with other OECD countries.

Researchers from the Organisation for Economic Co-operation and Development (OECD), particularly the OECD Economics Department, say digital technologies are rapidly transforming how businesses invest and build their productive capacity. Their latest analysis of investment patterns across more than 30 advanced economies shows that spending on digital assets such as computer hardware, software and databases has become one of the most important forces shaping modern economic growth.

The research finds that although overall business investment has remained relatively weak in many advanced economies since the global financial crisis, digital investment has continued to expand quickly. As companies adopt new technologies such as cloud computing, data analytics and artificial intelligence, digital assets are increasingly becoming the backbone of modern business operations.

A Slowdown in Traditional Investment

Many advanced economies have struggled with slow productivity growth for decades. Productivity growth has weakened since the 1970s, reducing the pace at which living standards rise. After the global financial crisis, another challenge emerged: weak capital accumulation.

Business investment across many OECD countries never fully returned to its earlier growth trend. Uncertainty, weaker demand and long-term structural changes in economies have all contributed to this slowdown. As a result, companies have been more cautious about investing in traditional assets such as buildings, infrastructure and machinery.

However, the new OECD research shows that one type of investment has continued to grow strongly despite these broader economic challenges: digital investment.

The Rapid Rise of Digital Assets

Digital investment includes spending on computers, telecommunications equipment, software systems and databases. These assets help firms manage data, automate processes and develop digital services.

Today, digital assets represent roughly one quarter of total business investment across OECD economies. A large share of this spending is directed toward intangible assets such as software and databases rather than physical equipment.

The growth of digital investment has been dramatic. Since 2007, spending on digital assets across advanced economies has more than doubled in real terms. Investment in ICT hardware has grown significantly, while spending on software and databases has increased even faster as firms expand their digital capabilities.

Digital investment has also proved more resilient than other types of investment during economic shocks. During both the global financial crisis and the COVID-19 pandemic, companies reduced spending on buildings and machinery far more than on digital technologies. In many cases, the crises actually accelerated digital adoption as businesses shifted to remote work systems, online platforms and automated operations.

The United States Pulls Ahead

One of the most important findings of the study is the widening gap in digital investment between countries. The United States has emerged as a clear leader, with businesses investing heavily in digital infrastructure and technologies.

Over the past decade, digital investment in the United States has grown much faster than in many other advanced economies, particularly those in Europe and Japan. According to the researchers, this stronger digital investment explains most of the difference in overall business investment performance between the United States and other OECD economies.

Interestingly, this trend is not driven only by large technology companies. While major tech firms often receive the most attention, the study shows that digital investment is spread across a wide range of industries. Financial services, retail trade, professional services and manufacturing companies are all investing heavily in digital tools to improve efficiency and expand digital services.

This broad adoption shows that digital technologies are becoming central to the functioning of the entire economy.

Digital Capital Grows Faster but Ages Quickly

Digital assets behave differently from traditional capital goods. Buildings and infrastructure may last for decades, but digital technologies become outdated much faster.

Software, data systems and computer equipment often need to be replaced within just a few years because of rapid technological progress. This means businesses must continuously invest in digital assets simply to maintain their technological capabilities.

Despite these high depreciation rates, digital capital is still growing faster than other types of capital because companies are investing so heavily in these technologies.

However, the research also shows that digital capital growth is becoming uneven across countries. While some economies are rapidly expanding their digital capacity, others are falling behind. Unlike traditional capital, where less developed economies often catch up over time, digital capital shows little sign of this convergence.

Why Digital Investment Matters for the Future

The findings highlight how digital investment is likely to shape productivity and economic growth in the coming decades. Technologies such as artificial intelligence, cloud computing and advanced data systems require large amounts of digital infrastructure.

Countries that invest heavily in these technologies are likely to gain advantages in productivity and innovation. Those who lag behind risk falling further behind in technological capability.

The researchers also point to several factors that influence digital investment. Access to financing is crucial because digital projects often require large upfront spending. Market size also matters, since digital technologies often benefit from scale. In addition, skilled workers are essential, as businesses need employees who can develop and operate advanced digital systems.

As digital transformation accelerates across industries, the study concludes that understanding what drives digital investment will be key for policymakers seeking to strengthen economic growth and competitiveness in the years ahead.