Since 1995, Japan’s economy has shifted its investment focus from tangible to intangible capital in response to demographic changes affecting the labor force. While tangible fixed capital investment declined, macro-level trends indicate a significant expansion in intangible capital investments. We interpret these changes by focusing on shifts in industrial technology and investment patterns, as well as their impact on economic growth. However, there remain many issues regarding the expansion of intangible capital investments, which now surpasses tangible capital investments, affects industrial efficiency, shapes the future economic structure, and can be effectively guided through policy measures. These include understanding the implications of this shift and addressing the challenges it presents. This chapter tackles the task of evaluations of the merits and demerits of intangible fixed capital investments, which differ from the technological efficiency of tangible capital, and linking these investments to economic growth. In the 1990s, Japan began to show signs of a new era, shifting away from a growth pattern that had continued since the end of World War II—one characterized by the expansion of heavy and the industries through capital I 1995, investment, which leveraged an increasing labor force and economies of scale to enhance efficiency and production capacity. Instead, there emerged a move toward building a new economic structure centered on the expansion of investments in intangible assets, often referred to as intellectual assets, and the development of an industrial structure that capitalizes on them. As is evident from Table 6-1, a key feature of economic growth since 1995 has been a sharp decline in the labor force, reflecting demographic changes, and a shift in capital accumulation from tangible to intangible assets. In Chapter 6, we will examine the outcomes of this expansion in intangible capital investment and consider its impact on the economy of the 21st century. The rise of intangible capital investments over tangible ones raises questions about industrial efficiency, future economic structures, and policy guidance. This shift’s implications and challenges need to be understood and addressed. This shift is evident in the focus on intellectual investments, such as research and development (R&D) and advancements in information and communication technology (ICT). These sectors have redefined economic efficiency and innovation. The rise of intangible capital has altered investment strategies and reshaped industrial dynamics, requiring a deeper understanding of the implications. This transformation calls for a reevaluation of how these investments contribute to productivity and growth, highlighting their role in developing a knowledge-driven economy.This chapter must tackle the task of evaluating the merits and demerits of intangible fixed capital investments, which differ from the technological efficiency of tangible capital, and linking these investments to economic growth. By assessing whether intellectual assets such as intra-firm R&D and ICT activities have enhanced economic efficiency and contributed to achieving policy goals related to the expansion of intangible capital, we clarify the significance and impact of the growing investments in intangible fixed assets.