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UK Innovation Index: Productivity and Growth in UK Industries

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  • Goodridge, Peter
  • Haskel, Jonathan
  • Wallis, Gavin

Abstract

This paper provides an update of the NESTA Innovation Index and 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 34% greater than tangible investment, in 2009, £124.2bn and £92.7bn respectively; (b) that R&D is about 11% of total intangible investment, software 18%, design 12%, and training and organizational capital 21% each; (d) the most intangible-intensive industry is manufacturing (intangible investment is 17% 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 has less impact on aggregate measures of growth in the 2000s. Regarding the contribution to growth, for 2000-09, (a) intangible capital deepening accounts for 26% of labour productivity growth, against computer hardware and telecommunications equipment combined (16%) and TFP (-0.4%); (b) adding intangibles to growth accounting lowers TFP growth by about 18 percentage points (c) capitalising R&D adds 0.04% to input growth and reduces ΔlnTFP by 0.02% and (d) manufacturing accounts for 47% of intangible capital deepening plus TFP.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9063.

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Date of creation: Jul 2012
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Handle: RePEc:cpr:ceprdp:9063

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Keywords: growth; innovation; intangibles;

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References

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  1. Dale Jorgenson & Mun Ho & Jon Samuels & Kevin Stiroh, 2007. "Industry Origins of the American Productivity Resurgence," Economic Systems Research, Taylor & Francis Journals, vol. 19(3), pages 229-252.
  2. Timmer,Marcel P. & Inklaar,Robert & O'Mahony,Mary & Ark,Bart van, 2010. "Economic Growth in Europe," Cambridge Books, Cambridge University Press, number 9780521198875, April.
  3. Erik Brynjolfsson & Lorin M. Hitt, 2000. "Beyond Computation: Information Technology, Organizational Transformation and Business Performance," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 23-48, Fall.
  4. Mauro Giorgio Marrano & Jonathan Haskel & Gavin Wallis, 2009. "What Happened To The Knowledge Economy? Ict, Intangible Investment, And Britain'S Productivity Record Revisited," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(3), pages 686-716, 09.
  5. Hulten, Charles R, 1978. "Growth Accounting with Intermediate Inputs," Review of Economic Studies, Wiley Blackwell, vol. 45(3), pages 511-18, October.
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Cited by:
  1. Rammer, Christian & Köhler, Christian, 2012. "Innovationen, Anlageinvestitionen und immaterielle Investitionen," ZEW Discussion Papers 12-085, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. King, Philip & Millard, Stephen, 2014. "Modelling the service sector," Bank of England working papers 500, Bank of England.
  3. Haskel, Jonathan & Wallis, Gavin, 2010. "Public Support for Innovation, Intangible Investment and Productivity Growth in the UK Market Sector," CEPR Discussion Papers 7725, C.E.P.R. Discussion Papers.
  4. Nicholas Oulton & María Sebastiá-Barriel, 2013. "Long and short-term effects of the financial crisis on labour productivity, capital and output," LSE Research Online Documents on Economics 48926, London School of Economics and Political Science, LSE Library.
  5. Niebel, Thomas & O'Mahony, Mary & Saam, Marianne, 2013. "The contribution of intangible assets to sectoral productivity growth in the EU," ZEW Discussion Papers 13-062, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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