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Intangible Investment in Japan: New Estimates and Contribution to Economic Growth

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  • Kyoji Fukao
  • Tsutomu Miyagawa
  • Kentaro Mukai
  • Yukio Shinoda
  • Konomi Tonogi

Abstract

The purpose of this paper is to measure intangible assets, to construct the capital stock of intangible assets, and to examine the contribution of intangible capital to economic growth in Japan. We follow the approach of Corrado, Hulten, and Sichel (2005, 2006) to measure intangible investment using the 2008 version of the Japan Industrial Productivity (JIP) Database. We find that the ratio of intangible investment to GDP in Japan has risen during the past 20 years and now stands at 11.6%, which is lower than the ratio estimated for the United States in the early 2000s. The ratio of intangible to tangible investment in Japan is also lower than equivalent values estimated for the United States. In addition, we find that, in stark contrast with the United States, where intangible capital grew rapidly in the late 1990s, the growth rate of intangible capital in Japan declined from the late 1980s to the early 2000s. In order to examine the robustness of our results, we also conducted a sensitivity analysis and found that the slowdown of the contribution of intangible capital deepening to economic growth and the recovery in Multi-Factor Productivity (MFP) growth from the second half of the 1990s observed in our base case remain unchanged even if we take on-the-job training and Japanese data with respect to investment in firm-specific resources into account.

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File URL: http://gcoe.ier.hit-u.ac.jp/research/discussion/2008/pdf/gd08-015.pdf
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Bibliographic Info

Paper provided by Institute of Economic Research, Hitotsubashi University in its series Global COE Hi-Stat Discussion Paper Series with number gd08-015.

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Date of creation: Dec 2008
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Handle: RePEc:hst:ghsdps:gd08-015

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Keywords: intangible investment; labor productivity; growth accounting;

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References

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  1. Nick Bloom & John Van Reenen, 2006. "Measuring and Explaining Management Practices Across Firms and Countries," CEP Discussion Papers dp0716, Centre for Economic Performance, LSE.
  2. Mauro Giorgio Marrano & Jonathan Haskel, 2006. "How Much Does the UK Invest in Intangible Assets?," Working Papers 578, Queen Mary, University of London, School of Economics and Finance.
  3. Carol Corrado & Paul Lengermann & Eric J. Bartelsman & J. Joseph Beaulieu, 2007. "Sectoral Productivity in the United States: Recent Developments and the Role of IT," German Economic Review, Verein für Socialpolitik, vol. 8, pages 188-210, 05.
  4. Ellen R. McGrattan & Edward C. Prescott, 2005. "Expensed and sweat equity," Working Papers 636, Federal Reserve Bank of Minneapolis.
  5. 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.
  6. Carol Corrado & Charles Hulten & Daniel Sichel, 2004. "Measuring capital and technology: an expanded framework," Finance and Economics Discussion Series 2004-65, Board of Governors of the Federal Reserve System (U.S.).
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Cited by:
  1. Dutz, Mark A. & Kannebley, Sergio Jr. & Scarpelli, Maira & Sharma, Siddharth, 2012. "Measuring intangible assets in an emerging market economy: an application to Brazil," Policy Research Working Paper Series 6142, The World Bank.

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