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Productivity and Growth in UK Industries: An Intangible Investment Approach

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  • Mariela Dal Borgo
  • Peter Goodridge
  • Jonathan Haskel
  • Annarosa Pesole

Abstract

This paper tries to calculate some facts for the “knowledge economy”. Building on the work of Corrado, Hulten and Sichel (CHS, 2005,9), using new data sets and a new micro survey, we (1) document UK intangible investment and (2) see how it contributes to economic growth. Regarding investment in knowledge/intangibles, we find (a) this is now greater than tangible investment at, in 2008, £141bn and £104bn respectively; (b) that R&D is about 11% of total intangible investment, software 15%, design 17%, and training and organizational capital 22%; (d) the most intangible-intensive industry is manufacturing (intangible investment is 20% of value added) and (e) treating intangible expenditure as investment raises market sector value added growth in the 1990s due to the ICT investment boom, but slightly reduces it in the 2000s. Regarding the contribution to growth, for 2000-08, (a) intangible capital deepening accounts for 23% of labour productivity growth, against computer hardware (12%) and TFP (40%); (b) adding intangibles to growth accounting lowers TFP growth by about 15% (c) capitalising R&D adds 0.03% to input growth and reduces lnTFP by 0.03% and (d) manufacturing accounts for just over 40% of intangible capital deepening plus TFP

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Bibliographic Info

Article provided by Department of Economics, University of Oxford in its journal Oxford Bulletin of Economics and Statistics.

Volume (Year): 75 (2013)
Issue (Month): 6 (December)
Pages: 806-834

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Handle: RePEc:bla:obuest:v:75:y:2013:i:6:p:806-834

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References

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  1. Rachel Soloveichik, 2010. "Artistic Originals as a Capital Asset," American Economic Review, American Economic Association, American Economic Association, vol. 100(2), pages 110-14, May.
  2. Nicholas Oulton, 2005. "Ex post versus ex ante measures of the user cost of capital," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 19885, London School of Economics and Political Science, LSE Library.
  3. FUKAO Kyoji & HAMAGATA Sumio & MIYAGAWA Tsutomu & TONOGI Konomi, 2007. "Intangible Investment in Japan: Measurement and Contribution to Economic Growth," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 07034, Research Institute of Economy, Trade and Industry (RIETI).
  4. Gaganan Awano & Mark Franklin & Jonathan Haskel & Zafeira Kastrinaki, 2010. "Measuring investment in intangible assets in the UK: results from a new survey," Economic and Labour Market Review, Palgrave Macmillan, Palgrave Macmillan, vol. 4(7), pages 66-71, July.
  5. Carol Corrado & Charles Hulten & Daniel Sichel, 2009. "Intangible Capital And U.S. Economic Growth," Review of Income and Wealth, International Association for Research in Income and Wealth, International Association for Research in Income and Wealth, vol. 55(3), pages 661-685, 09.
  6. Goodridge, PR, 2014. "Film, television & radio, books, music and art: estimating UK investment in artistic originals," Working Papers, Imperial College, London, Imperial College Business School 12918, Imperial College, London, Imperial College Business School.
  7. Timmer,Marcel P. & Inklaar,Robert & O'Mahony,Mary & Ark,Bart van, 2013. "Economic Growth in Europe," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9781107412446.
  8. Dale Jorgenson & Mun Ho & Jon Samuels & Kevin Stiroh, 2007. "Industry Origins of the American Productivity Resurgence," Economic Systems Research, Taylor & Francis Journals, Taylor & Francis Journals, vol. 19(3), pages 229-252.
  9. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 70, pages 9.
  10. Susanto Basu & John G. Fernald & Nicholas Oulton & Sylaja Srinivasan, 2004. "The Case of the Missing Productivity Growth, or Does Information Technology Explain Why Productivity Accelerated in the United States But Not in the United Kingdom?," NBER Chapters, in: NBER Macroeconomics Annual 2003, Volume 18, pages 9-82 National Bureau of Economic Research, Inc.
  11. Hulten, Charles R, 1978. "Growth Accounting with Intermediate Inputs," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 45(3), pages 511-18, October.
  12. Erik Brynjolfsson & Lorin M. Hitt, 2000. "Beyond Computation: Information Technology, Organizational Transformation and Business Performance," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 14(4), pages 23-48, Fall.
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Cited by:
  1. Dan Corry & Anna Valero & John Van Reenen, 2011. "UK economic performance since 1997: growth, productivity and jobs," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 47521, London School of Economics and Political Science, LSE Library.
  2. Millard, Stephen & Nicolae, Anamaria, 2014. "The effect of the financial crisis on TFP growth: a general equilibrium approach," Bank of England working papers, Bank of England 502, Bank of England.
  3. Goodridge, PR, 2014. "Film, television & radio, books, music and art: estimating UK investment in artistic originals," Working Papers, Imperial College, London, Imperial College Business School 12918, Imperial College, London, Imperial College Business School.
  4. Rammer, Christian & Köhler, Christian, 2012. "Innovationen, Anlageinvestitionen und immaterielle Investitionen," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 12-085, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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