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Intangible Capital in the Finnish Business Sector 1975-2005

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  • Jalava, Jukka
  • Aulin-Ahmavaara, Pirkko
  • Alanen, Aku

Abstract

This paper is the first effort to analyze the intangible investments of the Finnish non-financial business sector in 19752005 with a heretofore unseen scope of intangible investments in line with the definition of Corrado, Hulten and Sichel (2005, 2006). Not only GDP but also investments have become more weightless as the importance of scientific innovative property and economic competencies has increased. In 2005 Finnish business intangible investments amounted to 14.2 billion euro, which was 9 per cent in relation to (unrevised) GDP. Our results imply higher investments rates and lower labor shares than traditionally thought. Comparing our new results with SNA93-type growth decompositions we found that our revision increased the average growth rate of labor productivity by 0.48 percentage points in 19952000 and 0.06 percentage points in 20002005. Capitalizing intangible investments decreased the measure of our ignorance by 0.12 percentage points in 19952000 and 0.45 in 20002005. A shift to new, intangible, investments with higher marginal products than traditional capital has taken place. It is not any longer solely a matter of how much is invested, but what it is firms invest in.

Suggested Citation

  • Jalava, Jukka & Aulin-Ahmavaara, Pirkko & Alanen, Aku, 2007. "Intangible Capital in the Finnish Business Sector 1975-2005," Discussion Papers 1103, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:dpaper:1103
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    3. Cecilia Jona Lasinio & Stefano Manzocchi & Valentina Meliciani, 2017. "Knowledge Based Capital and Value Creation in Global Supply Chains," Working Papers LuissLab 17134, Dipartimento di Economia e Finanza, LUISS Guido Carli.
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    5. Lili Kang & Mary O'Mahony & Fei Peng, 2012. "New Measures of Workforce Skills in the EU," National Institute Economic Review, National Institute of Economic and Social Research, vol. 220(1), pages 17-28, April.
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    10. Berger Florian, 2012. "Measuring the Knowledge Economy – Intangible Spending and Investment in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 232(1), pages 12-30, February.
    11. Carol A. Robbins & Mary L. Streitwieser & William A. Jolliff, 2010. "R&D and Other Intangible Assets in an Input-Output Framework: Experimental Estimates with U.S. Data," BEA Working Papers 0065, Bureau of Economic Analysis.
    12. Asplund, Rita & Napari, Sami, 2011. "Intangible capital and wages: An analysis of wage gaps across occupations and genders in Czech Republic, Finland and Norway," Discussion Papers 1248, The Research Institute of the Finnish Economy.
    13. Rita Asplund & Sami Napari, 2011. "Intangibles and the Gender Wage Gap: An Analysis of Gender Wage Gaps Across Occupations in the Finnish Private Sector," Journal of Labor Research, Springer, vol. 32(4), pages 305-325, December.
    14. Amani Elnasri & Kevin J. Fox, 2017. "The contribution of research and innovation to productivity," Journal of Productivity Analysis, Springer, vol. 47(3), pages 291-308, June.
    15. Carolina Hintzmann & Josep Lladós-Masllorens & Raul Ramos, 2021. "Intangible Assets and Labor Productivity Growth," Economies, MDPI, vol. 9(2), pages 1-21, May.
    16. Maliranta, Mika & Määttänen, Niku, 2013. "Allocation and industry productivity: Accounting for firm turnover," ETLA Working Papers 11, The Research Institute of the Finnish Economy.
    17. Martin Falk, 2013. "New Empirical Findings for International Investment in Intangible Assets. WWWforEurope Working Paper No. 30," WIFO Studies, WIFO, number 46891.
    18. Amani Elnasri & Kevin J. Fox, 2014. "The Contribution of Research and Innovation to Productivity and Economic Growth," Discussion Papers 2014-08, School of Economics, The University of New South Wales.
    19. Li, Qing & Wu, Yanrui, 2018. "Intangible capital in Chinese regional economies: Measurement and analysis," China Economic Review, Elsevier, vol. 51(C), pages 323-341.
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