SLIDE 1
Recent Advances in the Measurement of Intangible Assets
Presentation to NTTS 2015 Mary O’Mahony, (KCL) Co-authors: Carol Corrado (The Conference Board ), Jonathan Haskel (Imperial College London) and Cecilia Joan Lasinio (LUISS and Istat)
SLIDE 2 Intangible investments important driver of economic growth
- Significant investment effort by firms
– and the public sector
- Capital input understated in the past as it
relied mostly on tangible assets
- Probably explains the ‘productivity puzzle’
- and the decline in labour share
SLIDE 3
European Commission funded research
FP7 funded projects: Business sector COINVEST: www.coinvest.org.uk INNODRIVE: www.innodrive.org INDICSER: www.indicser.com Regional IAREG: www.iareg.org Public sector SPINTAN: www.spintan.net Research efforts led to the creation of a harmonised database for the Business sector, INTAN-Invest www.intan-invest.net. Currently being extended to include the public sector
SLIDE 4
What are intangible assets?
Three main types of intangible assets identified by the research Computerised information Software and databases Innovative property Scientific R&D, Mineral exploration, new architectural and engineering design, New product development in the financial industry Economic Competencies Market research, Advertising, Firm specific human capital (training), Organisational capital
SLIDE 5
What are intangible assets?
Many intangible assets involve both purchased and own account elements requires estimation Broader definition than currently in the National Accounts especially as regards economic competencies
SLIDE 6 Importance of intangible assets: large variation across European countries
0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00%
Business Intangible Investment as a percent of GDP (average 1998-2005).
SLIDE 7 Importance of intangible assets: Despite significant investment EU lags the US
Business Intangible Investment as a percent of GDP (average 1998-2005).
0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00%
SLIDE 8 Importance of intangible assets
- Investment in intangible capital by businesses is
sizeable and is able to explain a significant share of labour productivity growth
- Some EU countries are already at the threshold of
investing similar amounts of intangible capital as tangible capital investments
- After expanding the definition of capital to include
intangibles, capital rather than total factor productivity becomes the dominant source of growth in the business sector
- Research also indicates that intangible assets are
important in facilitating innovation and the adoption of new technologies
SLIDE 9 Other implications
- The inclusion of intangible assets in national
accounts has a significant impact on the levels
– with countries such as Italy and Spain investing significantly less than other EU countries, the already large macroeconomic disparities within the euro area will become even more distinct.
SLIDE 10 Including intangibles in the national accounts
- Much work already taking place to bring intangibles
into the national accounts
- Research community has fed into this process through
developing methodological frameworks, demonstrating the feasibility of incorporating intangibles and acting as consultants to NSIs
- Further progress would benefit from close links
between research and statistical communities
- Especially in updating/extending datasets initiated by
the research community as part of research projects
- Essential to have timely good quality data to feed into
research that informs policy
