Intangible Capital and Productivity of Portuguese Firms in the Last Decade (2010-2019)

This article analyzes the effects of intangible capital on the productivity of Portuguese firms in the last decade. Intangible assets can increase the productivity of labor and productive factors. Although no consensus has been reached on standard principles and uniform methods for measuring intangible assets, the attempts of various investigators, such as those proposed in this research, pave the way for the development of a framework. To achieve this objective, a Cobb-Douglas production function was estimated at the firm level, where intangible capital is assumed as a productive factor. To perform a sectoral analysis, the model was estimated by activity sector. We also estimated the evolution of the contribution of intangible capital in two distinct periods 2010-14 (recession) and 2015-19 (recovery). The results obtained were to some extent expected, confirming the evidence of the positive effect of intangible assets on productivity. The intangible effect is greater in the sectors of Manufacturing and Construction, and inside the Manufacturing sector, the Textile industry is where the effect is larger. For the Trade and Business Services sector the effect is negative or null. Although intangible capital has a strong influence at the aggregate level, it has gradually lost its relevance. This result is understandable, given the low and decreasing levels of intangible investment and the continuous decrease in intangible capital during the decade.