The European Central Bank has published a working paper, presented as research reflecting the authors’ views rather than the ECB’s, examining whether investment composition helps explain growth differences between the European Union and other advanced economies from 1996 to 2021. The paper finds that the EU’s weaker productivity performance relative to the United States is linked less to the overall level of investment, which is broadly similar, than to a lower share of investment in intangible and tangible information and communication technology capital. Investments in communications equipment, research and development, and other intellectual property products are associated with stronger GDP per capita growth than other asset classes. Using panel fixed effects and local projection methods, the paper introduces an investment efficiency ratio to compare the growth contribution of different asset types relative to their share in total investment. It finds that ICT-related investment shows the strongest and most persistent association with growth, although this relationship weakened after 2008. The results also show heterogeneity across countries. Higher-income economies and countries with stronger human capital see larger growth benefits from intangible and ICT investment, while in lower-income EU member states other tangible investment is more closely associated with growth. In an illustrative scenario, the paper estimates that if the EU matched US growth rates in high-efficiency investment types, EU GDP per capita could be around 1.3 percent higher by 2035, and more than 8.5 percent higher under a full catch-up scenario.
European Central Bank2026-06-02
European Central Bank working paper links lower EU intangible and ICT investment to weaker growth and a potential 1.3 percent GDP per capita gain by 2035
The European Central Bank published a working paper on how investment composition has shaped growth differences between the European Union and other advanced economies from 1996 to 2021. It finds the EU’s weaker productivity performance relative to the United States stems from a lower share of investment in intangible and information and communication technology capital, which shows the strongest and most persistent association with GDP per capita growth. An illustrative scenario suggests that if the EU matched US growth rates in high-efficiency investment types, EU GDP per capita could be around 1.3% higher by 2035, and more than 8.5% higher under a full catch-up scenario.