It is, of course, difficult to separate rates of return based on the innovations embedded in new equipment from the enhanced returns made available by productive ideas of how to rearrange existing facilities. From an accounting perspective, efficiency gains, broadly defined as multifactor productivity, have accounted for roughly half the growth in labor productivity in recent years.
Capital deepening accounts for most of the remainder. All else being equal, domestic investment would raise future labor productivity and thereby help provide for our aging population. But the incremental benefit of additional investment may itself be affected by aging.