| Summary: | <p>The article studies the cross-industry relation between production, investment and productivity in American manufacturing industry, disaggregated to 4-digit, in the period 1960-94. From the empirical analysis it turns out that no strong direct relation between investments and productivity can be observed in the presence of increasing returns by which when the output rises there is a rise both in output per employee and in output per unit of capital employed. For the same reason, the inter-industry differences in productivity growth rates are simultaneously linked, positively, with the growth of output and, negatively, with that of investments. The growth of production and that of new industries are placed in the Smithian perspective of increasing returns stemming from the effects of the increase in the division of labour on the development of the technological and organizational capabilities that can be realized in productive activity as such. </p><p> </p><p> </p><p><strong>JEL Codes:</strong> D24, E22, L60, J24, O33</p><p><strong>Keywords:</strong> Capital, Investment, Manufacturing, Production, Productivity</p>
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