An Innovation Index Based on Knowledge Capital Investment: Definition and Results for the UK Market Sector
AbstractWe (a) propose an implementable innovation index, (b) relate it to existing innovation definitions and (c) show whole-economy and industry-specific results for the UK market sector, 2000-2005. Our innovation measure starts by observing that we could get more GDP without innovation by simply duplicating existing physical capital and labour (e.g. adding a second aircraft and crew on an existing route). Thus we propose to measure innovation as the additional GDP over and above the addition existing physical capital and labour. In our measure this is the contribution to GDP growth of market sector investment in knowledge (or intangible) capital. This contribution is measured from company spending on knowledge/intangible assets and TFP growth. We relate our measure to the literature on innovation definitions, TFP, creative industries and hidden innovation. We implement it for six UK market sector industries, 2000-2005, combining with output and tangible investment data from the EUKLEMS database. Our main findings are as follows. Over 2000-2005, market sector labour productivity grew at 2.74% per annum, of which the contribution of knowledge capital, our innovation measure, was 1.24% pa. In turn, manufacturing accounted for about 60% of this latter figure. If one includes increase in labour skill deepening (0.45% pa) as innovation, then innovation contributed 61% (=(1.24+0.45)/2.74)of labour productivity growth over the period.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4021.
Length: 45 pages
Date of creation: Feb 2009
Date of revision:
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Other versions of this item:
- Clayton, Tony & Dal Borgo, Mariela & Haskel, Jonathan, 2009. "An Innovation Index Based on Knowledge Capital Investment: Definition and Results for the UK Market Sector," CEPR Discussion Papers 7158, C.E.P.R. Discussion Papers.
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-02-28 (All new papers)
- NEP-CSE-2009-02-28 (Economics of Strategic Management)
- NEP-EFF-2009-02-28 (Efficiency & Productivity)
- NEP-KNM-2009-02-28 (Knowledge Management & Knowledge Economy)
- NEP-MAC-2009-02-28 (Macroeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Mauro Giorgio Marrano & Jonathan Haskel & Gavin Wallis, 2007. "What Happened to the Knowledge Economy? ICT, Intangible Investment and Britain's Productivity Record Revisited," Working Papers 603, Queen Mary, University of London, School of Economics and Finance.
- Marcel P. Timmer & Mary O’Mahony & Bart van Ark, 2007. "EU KLEMS Growth and Productivity Accounts: An Overview," International Productivity Monitor, Centre for the Study of Living Standards, vol. 14, pages 71-85, Spring.
- Haskel, J & Goodridge, P & Pesole, A & Dal Borgo, M, 2011.
"Productivity and growth in UK industries: an intangible investment approach,"
9027, Imperial College, London, Imperial College Business School.
- Mariela Dal Borgo & Peter Goodridge & Jonathan Haskel & Annarosa Pesole, 2013. "Productivity and Growth in UK Industries: An Intangible Investment Approach," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(6), pages 806-834, December.
- Dal Borgo, Mariela & Goodridge, Peter & Pesole, Annarosa, 2012. "Productivity and Growth in UK Industries: An Intangible Investment Approach," CAGE Online Working Paper Series 87, Competitive Advantage in the Global Economy (CAGE).
- Edquist, Harald, 2011. "Intangible Investment and the Swedish Manufacturing and Service Sector Paradox," Working Paper Series 863, Research Institute of Industrial Economics.
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