The government and businesses have taken little advantage of low interest rates
to boost investment, despite sound government finances and strong profitability.
Non-residential investment spending as a share of GDP is modest (Figure 15). The growth
of the capital stock has slowed and appears to be weaker than in most high income
countries (OECD, 2015). Relative to value-added, over the past 20 years business
services account for most of the decline in non-residential business investment. The
subdued growth in investment can slow the replacement of old vintages of capital goods,
which may constrain long-run competitiveness as new technologies are often embodied in
new capital goods.
Weak non-residential investment does not appear to reflect a shift towards intangible
forms of productive capital (“knowledge-based capital”, KBC). While business expenditure
in R&D in Germany is high compared to other OECD countries, investment in KBC, which
also includes spending on other intangible assets, such as other intellectual property,
software and management skills, is lower than in leading high-income OECD economies
and has grown little over time.