2.1.2. Capital Productivity (CP)

CP is measured as the ratio between the volume of output and the volume of capital input, defined as the flow of productive services that the capital delivers in production [24]. CP can be increased by reducing the capital input while maintaining the same amount of production or by increasing the production amount with the same capital input. Therefore, CP reflects how efficiently capital is used to produce output [24]. In this study, CP is estimated by gross output divided by capital stock.

ICT capital utilization has an important role in increasing CP in the energy sector. One reason is that renewable energy systems, especially solar photovoltaic and wind power, are widely diffused worldwide. ICT capital is an important factor in the efficient use of renewable energy generation in distributed energy systems [26]. In particular, the control system for balancing energy supply and demand requires ICT capital to minimize energy loss and to enhance capacity utilization [27]. Based on this background, this study assumes that ICT capital stock contributes to CP growth and that this contribution effect is stronger in countries that achieve a high share of distributed energy (e.g., solar photovoltaic and wind power) in their total energy supply.
