Hardly any investment in expanding computers and software

More than one quarter of fixed capital formation in the market sector in 2002 consisted of machines and production installations. Total fixed capital formation in this sector amounted to 54 billion euro in 2002. Private companies invested just over 8 billion euro in computers and software, mostly to replace outdated equipment.

Fixed capital formation, 2002

Computerisation

Computers played an increasingly important part in the production process in the second half of the nineties, and the share of investment spending on computers and software rose substantially: from 10 percent in 1995 to 16 percent in 1999. Since then the share has remained fairly constant.

The share of investment spent on machines and installations, on the other hand, fell sharply at the end of the nineties: from 32 percent of total investment in 1997, to one quarter in 2001. In 2002 the share rose again slightly.

Share in total fixed capital formation, price level 2002 

The decreasing share of machines in total investment is connected with the growth of the services sector, which invests mainly in buildings, computers and software.

Saturation

Only 10 percent of investment in computers in 2002 was intended to increase the number of computers. For software the share of expansion investment was only 5 percent. Apparently investment in expanding computer capacity has all but come to a halt.

Provisional figures for 2003 show that the expansion share in investment in computers and software has fallen even further. Nearly all money spent on computers was to replace outdated equipment.

Investment share spent on expansion of computers and software 

In 1998 investment in expanding computers and software still accounted for as much 50 and 40 percent of investment spending on these two components respectively. Now every workplace has a computer, the point of saturation seems to have been reached. The less favourable economic climate also has resulted in a delay in investment spending on computers and software.

Dirk van den Bergen and Sandra Schaaf