Booming investment in the 1990s was due importantly to steep  BIS Review 14/2002  3  declines in prices of high-tech equipment, which largely reflected rapid technical progress. About ½ percentage point of the increase in productivity growth in the 1995-99 period can be attributed to this so-called capital deepening.
Although the extraordinary pace of investment spending in those boom years was not sustainable, I believe that technological progress will continue to drive down the cost of information technology in the coming years, inducing still robust growth of the capital stock. Moreover, businesses have reaffirmed their intentions to improve productivity by substituting cost-saving high-tech capital for labor.