R&D and Other Intangible Assets in an Input-Output Framework: Experimental Estimates with U.S. Data
The U.S., along with many other countries, plans to adjust official economic statistics in coming years to recognize R&D and several other intangibles as capital assets. We present here experimental estimates of the impact of capitalized intangibles on industry output and industry value added. We do this using the concepts of the 2008 System of National Accounts (SNA) for classifying intangible assets, along with the framework of the U.S. input-output (I-O) accounts. The intangibles we treat as assets are R&D expenditures, entertainment, literary, and artistic originals, and architectural and engineering design originals. R&D expenditures and entertainment, literary, and artistic originals are explicitly identified as produced intangible assets. We argue that some architectural and engineering design originals, while not explicitly indentified as such in the SNA, fit within the SNA definition of produced assets. Based on our experimental measures, new private intangible investment in R&D, entertainment, artistic, and literary originals, and engineering and architectural originals was 218 billion dollars in 2002. If these intangibles were treated as investment, the result would more than double the existing estimate of intangible capital compared with published measures of new private fixed investment in intangible assets in the U.S. economic accounts. While all sectors invested in these newly measured intangible assets, the distribution across sectors was heavilyskewed: R&D accounted for three quarters of this new investment, with manufacturing R&D accounting for one half of this new private intangible investment. Our experimental estimates indicate investment in entertainment, literary, and artistic originals accounted for 16 percent of new private intangible investment, with 85 percent of this occurring in the information sector. Investment in architectural and engineering designs was spread across all sectors, however, two sectors accounted for 85 percent of this investment – professional and managerial services (63 percent) and construction (22 percent).
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