Gains in productivity increase the amount of capital available for investment or increase profits, depending on what the business that benefits from it wishes to do with the cost savings. Anything that increases available capital is a major plus for an economy.

As far as capital flight, there is an old saying that capital knows no borders. You must maintain an economy that results in a net inflow of capital by attracting off-setting foreign capital, or the money invested elsewhere must return the profits back to our economy, and in both those cases that ain't us.