Productivity and Machinery Investment: A Long Run Look 1870-1980

Over the past century the long-run growth of six economies shows a strong association between investment in machinery and economic growth that holds both within and across nations and periods. A similar strong association holds for the post-world War II period for a broader cross section of nations. A number of considerations suggest that this association is causal, and that a high rate of machinery investment is a necessary prerequisite for rapid long-run productivity growth - a hypothesis also supported by narratives from the history of technology.