This paper reviews the literature on investment and productivity, with the debate between neo-classical and new growth theories providing a context for discussion. The first part sketches the role of investment in determining productivity in these two theories. The second part reviews a wide range of current issues related to investment and productivity, including international evidence on investment spillovers from equipment investment, potential research & development spillovers, the computer productivity paradox, the impact of investment on labour market outcomes, the renewed embodiment controversy, and recent microeconomic evidence from large longitudinal databases. Some important policy implications of current research are outlined, and relevant questions that remain unanswered are summarized in order to provide direction for future research.