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Can Investment in Intangibles Explain the Swedish Productivity Boom in the 1990s?

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  • Edquist, Harald

    () (Research Institute of Industrial Economics (IFN))

Abstract

After a severe crisis in the early 1990s, the Swedish economy experienced a boom in productivity growth. According to economists there have been primarily three explanations for the fast productivity growth in 1995–2004: Market reforms, recovery from the crisis and the impact of information and communication technology (ICT). This paper offers an alternative view by recognizing that firms make substantial investment in intangible assets such as R&D, design, advertising etc. These investments are not classified as investment in the National Accounts, where only tangible assets are defined as investment. This paper provides estimates of investment in intangible assets and uses the growth accounting framework to analyze the Swedish productivity boom. The results show that investment in intangibles was approximately 246 bn SEK in 2004 or 9 percent of GDP. Moreover, intangible capital accounted for almost 50 percent of labor productivity growth in the Swedish business sector 1995–2004. Thus, investment in intangibles was an important source to the Swedish productivity boom in 1995–2004.

Suggested Citation

  • Edquist, Harald, 2009. "Can Investment in Intangibles Explain the Swedish Productivity Boom in the 1990s?," Working Paper Series 809, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0809
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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.
    2. repec:eee:streco:v:42:y:2017:i:c:p:1-12 is not listed on IDEAS
    3. Edquist, Harald & Henrekson, Magnus, 2016. "Do R&D and ICT Affect Total Factor Productivity Growth Differently?," Working Paper Series 1108, Research Institute of Industrial Economics, revised 28 Nov 2016.
    4. Edquist, Harald, 2011. "Intangible Investment and the Swedish Manufacturing and Service Sector Paradox," Working Paper Series 863, Research Institute of Industrial Economics.
    5. Szalavetz, Andrea, 2011. "Innovációvezérelt növekedés?
      [Innovation-driven growth?]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 460-476.
    6. Antonin Bergeaud & Gilbert Cette & Rémy Lecat, 2016. "Productivity Trends in Advanced Countries between 1890 and 2012," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(3), pages 420-444, September.
    7. repec:eee:riibaf:v:42:y:2017:i:c:p:1115-1122 is not listed on IDEAS
    8. Edquist, Harald & Henrekson, Magnus, 2017. "Swedish lessons: How important are ICT and R&D to economic growth?," Structural Change and Economic Dynamics, Elsevier, vol. 42(C), pages 1-12.
    9. Artem A. Eremin, 2014. "The Effect of Advertising on Economic Growth in the USA from a New Methodological Perspective," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 3-14.
    10. Magnus Lodefalk, 2014. "The role of services for manufacturing firm exports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(1), pages 59-82, February.
    11. Martin Falk, 2013. "New empirical findings for international investment in intangible assets," WWWforEurope Working Papers series 30, WWWforEurope.
    12. Edquist, Harald & Henrekson, Magnus, 2013. "Product Market Reforms and Incentives to Innovate in Sweden," Working Paper Series 986, Research Institute of Industrial Economics.
    13. Lars Calmfors, 2012. "Sweden - from Macroeconomic Failure to Macroeconomic Success," CESifo Working Paper Series 3790, CESifo Group Munich.
    14. Hyunbae Chun & M. Ishaq Nadiri, 2016. "Intangible Investment and Changing Sources of Growth in Korea," The Japanese Economic Review, Japanese Economic Association, vol. 67(1), pages 50-76, March.
    15. Felix Roth & Anna-Elisabeth Thum, 2013. "Intangible Capital and Labor Productivity Growth: Panel Evidence for the EU from 1998–2005," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59(3), pages 486-508, September.
    16. Crass, Dirk & Licht, Georg & Peters, Bettina, 2014. "Intangible assets and investments at the sector level: Empirical evidence for Germany," ZEW Discussion Papers 14-049, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

    More about this item

    Keywords

    Intangibles; Investment; Economic growth;

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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