Change in the composition of corporate investment and reality of the increase in investment

We look at the four largest euro-zone countries and at the euro zone as a whole. We start by breaking down companies’ productive investment between machinery and equipment on the one hand, and intangible investment (R&D, intellectual property, software, communication, marketing, advertising, etc.) on the other. This enables us to document the increase in the weight of intangible investment in that of total investment: it is considerable (in the euro zone as a whole, 73% of the increase in productive investment is due to intangible investment). We then look at how we go from gross corporate investment to net investment (by subtracting companies’ consumption of fixed capital). This shows that the increase in companies’ capital consumption, due to the short life span of intangible capital, means that while the gross corporate investment rate has increased everywhere, the net investment rate has at best stagnated and even declined. Given the shorter lifespan of equipment, there is indeed under-investment in the euro zone, but we have to look at net investment to see it.