Paper by Carol Corrado, Jonathan Haskel and Cecilia Jona-Lasinio at 2015 ASSA Conference “Private and Public Intangible Capital: Productivity Growth and New Policy Challenges”

The measurement of intangible investment is a fundamental challenge in both sources-of-growth analysis and national accounting practice. Following the seminal work of Corrado, Hulten and Sichel (2005), major research efforts were undertaken to measure aggregate business sector intangible investment (CoInvest; INNODRIVE), and to develop an harmonized measurement framework (INTAN-Invest). At the same time, country specific estimates of intangibles have emerged. As overall business intangible investment is large and growing in advanced countries (Corrado et al 2013) the development of harmonized methods and measures of intangible capital for the Public as well as the Business sector at an higher level of industry detail is essential for a deeper understanding of economic growth and for the design of macroeconomic policies aimed at stimulating sustained growth, competitiveness and sustainable development. In this paper we present a theoretical framework for the capitalization of intangibles in the Public and non-profit sectors as developed under the SPINTAN project. We combine the project’s newly developed measures of “public” intangibles with INTAN-Invest’s new industry-level estimates and review their implications for the rate and trajectory of total, tangible, and intangible investment in the EU and US in recent years. We also evaluate econometrically the joint/disjoint role of public and business sector intangibles as sources of growth in a sample of EU15 member countries plus the US over the period 1995-2012. Finally, we evaluate how economic policy settings can be readjusted to favor intangible investment (where appropriate) and to stimulate efficient reallocation of resources to new sources of growth.

Paper

2015 ASSA Conference 3-5 January, 2015, Boston

December 31st, 2014