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Vol. 80, No. 1
Posted 1998-01-01

Measuring Real Investment: Trends in the United States and International Comparisons

by Milka S. Kirova and Robert E. Lipsey

The standard measures of nominal capital formation suggest that the proportion of GDP the United States is dedicating to investment has been much lower than that of other developed countries throughout the last 25 years. By calculating the measures in real terms across countries and over time, the authors show that the U.S. investment ratios have been rising over time, coming increasingly closer to those of other countries. Using a broader measure of capital formation this is more consonant with economic concepts, they show that U.S. investment has been close to that of other countries since 1970 and was an above-average share of total output in the most recent period studied (1990-94). Their calculations indicate that, broadly defined, real capital formation per capita and per worker have been 30 to 60 percent higher in the United States than in the other countries studied.

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