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Treating Intangible Inputs As Investment Goods: The Impact On Canadian Gdp

Author

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  • Nazim Belhocine

    (International Monetary Fund)

Abstract

National income accounts view most business expenditures on intangible goods as acquisitions of intermediate inputs that get entirely used up in the production of final output. After arguing against this convention, I construct a data set to document firms’ expenditures on an identifiable list of intangible items for which there is now wide agreement among national accountants. I then examine the implications of treating intangible spending as an acquisition of final (investment) goods on GDP growth for Canada. I find that investment in intangible capital by 2002 is almost as large as the investment in physical capital. This result is in line with similar findings for the U.S. and the U.K. Furthermore, the growth in GDP and labor productivity may be underestimated by as much as 0.1 percentage point per year during this same period. The discussion on the need to capitalize intangibles and the magnitude of the findings demonstrate the necessity to report such expenditures as investments and to collect this data as an integral part of the Canadian system of national income accounts.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Nazim Belhocine, 2008. "Treating Intangible Inputs As Investment Goods: The Impact On Canadian Gdp," Working Paper 1215, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:1215
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    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/wpaper/qed_wp_1215.pdf
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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. Tatiana Muntean, 2014. "Intangible Assets and their Contribution to Labour Productivity Growth in Ontario," International Productivity Monitor, Centre for the Study of Living Standards, vol. 27, pages 22-39, Fall.
    3. repec:dau:papers:123456789/5002 is not listed on IDEAS
    4. Guo, Kaiming & Hang, Jing & Yan, Se, 2021. "Servicification of investment and structural transformation: The case of China," China Economic Review, Elsevier, vol. 67(C).
    5. International Monetary Fund, 2016. "Ireland: Selected Issues," IMF Staff Country Reports 2016/257, International Monetary Fund.
    6. Nazim Belhocine, 2008. "The Embodiment Of Intangible Investment Goods: A Q-theory Approach," Working Paper 1217, Economics Department, Queen's University.
    7. Nazim Belhocine, 2008. "The Stock Of Intangible Capital In Canada: Evidence From The Aggregate Value Of Securities," Working Paper 1216, Economics Department, Queen's University.
    8. Li, Qing & Vo, Long Hai & Wu, Yanrui, 2019. "Intangible capital distribution in China," Economic Systems, Elsevier, vol. 43(2), pages 1-1.
    9. Carolina Hintzmann & Josep Lladós-Masllorens & Raul Ramos, 2021. "Intangible Assets and Labor Productivity Growth," Economies, MDPI, vol. 9(2), pages 1-21, May.
    10. Masayuki MORIKAWA, 2012. "Financial Constraints in Intangible Investments: Evidence from Japanese firms," Discussion papers 12045, Research Institute of Economy, Trade and Industry (RIETI).
    11. Giglio, Stefano & Severo, Tiago, 2012. "Intangible capital, relative asset shortages and bubbles," Journal of Monetary Economics, Elsevier, vol. 59(3), pages 303-317.
    12. Li, Qing & Wu, Yanrui, 2018. "Intangible capital in Chinese regional economies: Measurement and analysis," China Economic Review, Elsevier, vol. 51(C), pages 323-341.

    More about this item

    Keywords

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    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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