A puzzle in need of an answer: Why are companies in OECD countries investing in inefficient capital?

The capital intensity of companies in OECD countries has risen . In addition , they have increased their investment in new technologies and automation: one may therefore think that companies are employing more efficient capital in the OECD. But labour productivity and total factor productivity have slowed: in reality, what appears to be additional efficient corporate capital is not. We therefore have a paradox: productivity and potential growth have slowed despite the rise in capital intensity; further, since productivity is low and the level of capital employed is high, the capital income share of GDP has risen at the expense of wages. So why are companies in the OECD investing in capital that is proving to be inefficient, insofar as it is depressing productivity and technological progress?