The Spatial Footprint of the Knowledge Economy: The Role of Intangible Investment in Shaping Regional Inequalities in Great Britain

Since the advent of the knowledge economy it has become evident that the territorial footprint of investment in intangible assets is largely asymmetrical. First, these types of assets tend to be distributed unevenly across space. Second, intangible assets are an important source of productivity growth and competitiveness. Although significant advances have been made in measuring intangible assets and accounting for their effects in economic outcomes, their exact nature remains vague. Within the national accounts framework the majority of intangibles are, even now, still treated as intermediate expenditure. Consequently, intangibles are largely excluded from conventional measures of output and investment, making it difficult to account for their spatial effects. The present paper adjusts gross value added (GVA) data for NUTS 3 regions in Great Britain for intangibles. The adjusted series are then used to investigate trends in regional inequalities in GVA per employee in this country during the pre‐recession period 1995–2007.