Researchers analyzing growth and productivity across EU and other advanced economies found that increases in tangible investment consistently raise total factor productivity (TFP) growth. Using data from EUKLEMS and OECD, the study presented investment shares and estimated coefficients, showing a significant positive relationship for tangible investment in both EU26 and the broader EU26+US, JP, UK panels. Intangible and ICT investments produced smaller positive effects, while a lagged TFP term was negatively related to current TFP growth. Employment rate and institutional quality did not have significant impacts. The models incorporated country and time fixed effects, clustered standard errors, and explained about 42% of the variation in TFP growth across 620–694 observations. Figures also illustrate investment shares and shifts in human‑capital indices, but the analysis focuses on methodological aspects of empirical macroeconomics.
© European Central Bank, 2025.
Summary derived from the ECB website (https://www.ecb.europa.eu ).
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