A digital divide in investment: An uneven shift towards digital capital

In 2024, GDP growth across the OECD relied more on increases in labour input and less on productivity gains than in earlier periods, as highlighted in the OECD Compendium of Productivity Indicators 2026. As demographic pressures mount, future growth and improvements in living standards will increasingly depend not only on the size of the workforce but also on how efficiently labour and capital are used.

Investment is central to improving that efficiency. It can boost productivity growth by equipping workers with better tools and infrastructure and enabling firms to adopt new technologies. Recent investment trends offer a window into both the level and composition of investment, shedding light on broader structural change and the outlook for productivity growth.

The investment rate refers to gross fixed capital formation (GFCF) as a share of GDP, covering assets such as buildings, machinery, ICT equipment, software and databases, and research and development (R&D). In 2024, investment rates declined in 35 of the 42 OECD and accession candidate countries with available data, although most declines were modest. As a result, the OECD average fell from 23.0% of GDP in 2023 to 22.6% in 2024. This placed it below its pre-global financial crisis average for 2000-07, but above its pre-pandemic average for 2010-19 (Figure 1).

The composition of investment across industries and assets evolves with structural shifts in the economy, policy changes and economic shocks. Its distribution across industries indicates where productive capacity is expanding, while its distribution across asset types reflects the distinct economic functions capital serves, from building tangible productive capacity to strengthening the intangible knowledge base that supports innovation. As economies become more digitalised and knowledge-intensive, these compositional changes may have important implications for aggregate productivity.

Across industries, the 2024 decline was broadest in real estate, where investment as a share of GDP fell in 19 of the 23 countries with available data. By contrast, investment in the information and communication industry, which includes telecommunications, computer programming and other information service activities, increased slightly as a share of GDP on average. Compared with the 2010-19 average, investment relative to GDP was higher in 27 of 32 countries in 2024 or the latest available year, a more widespread increase than in any other industry. Investment also rose in most countries for the industry group comprising professional, administrative, financial and insurance activities.

Across asset types, recent trends reveal a marked contrast between traditional physical assets and ICT-related capital. Between 2023 and 2024, declines in dwellings and buildings dragged down total investment rates in 23 of the 30 countries with available data. Machinery excluding ICT equipment also weighed on investment in 21 countries, although the changes were generally smaller and more varied. By contrast, ICT investment, which comprises computer hardware, telecommunications equipment, software and databases, increased as a share of GDP in half of the countries covered.

Compared with the 2010-19 average, ICT investment rates were higher in 27 of 35 countries in 2024, more than for any other asset group. In most countries, software and databases accounted for the greatest share of ICT investment, highlighting the growing importance of intangible digital assets. R&D investment showed a similar pattern: despite modest declines in most countries in 2024, R&D investment rates remained above their 2010-19 averages in most cases. Taken together, these patterns point to a shift towards digital and knowledge-based forms of capital.

ICT investment rates rose broadly across OECD countries in 2020, partly reflecting increased demand for digital infrastructure associated with the shift to remote working. However, the scale of the increase varied across countries, and the gap between them widened further in the following years. This growing dispersion becomes clearer when countries are grouped into quartiles according to their ICT investment rates in each year.  

The gap between the top and bottom quartiles increased only modestly from 2.1 to 2.3 percentage points of GDP between 2010 and 2019, before widening more sharply to 3.3 percentage points in 2024. In 2024, countries in the top quartile invested an average of 4.7% of GDP in ICT, compared with 1.4% in the bottom quartile (Figure 2).

The United States and Germany, which were consistently in the top and bottom quartiles, respectively, in 2010, 2019 and 2024, illustrate this divergence. Between 2010 and 2024, ICT investment rose from 3.1% to 4.0% of GDP in the United States but remained broadly stable at around 1.5% in Germany.

The Compendium finds that cross-country differences in MFP growth in digital-intensive industries were greater in 2023-24 than during 2010-19. This widening dispersion suggests that countries are increasingly diverging in how efficiently they combine capital, skills and new technologies in these economic activities.

Widening gaps in ICT investment could contribute to productivity differences, particularly in digital-intensive industries, through two channels. Directly, they affect the amount and quality of capital available to workers. And indirectly, they shape the capacity of firms to adopt and use advanced digital technologies (OECD/APO, 2022).

As AI technologies diffuse more widely, countries with stronger investment in digital infrastructure and complementary intangible assets are likely to be better positioned to translate new technologies into productivity gains. Differences in ICT and related investment may therefore play an increasingly important role in shaping productivity performance across countries.

OECD/APO (2022), Identifying the Main Drivers of Productivity Growth: A Literature Review, OECD Publishing, Paris