Intangible Capital as a Source of Economic Growth and Productivity: A Literature Review and Policy Guidelines

This review synthesizes the latest scholarly evidence on intangible capital. Drawing on 60 recent studies across macro, meso, and micro levels (anchored by firm-level data from Finland, broader Europe, the US, and Asia) it demonstrates that intangible investments have emerged as the preeminent engine of economic growth, competitiveness, and productivity. The literature yields three critical imperatives for public policy. First, the measurement and statistical tracking of intangibles require a fundamental overhaul; at present, a swath of these investments remains invisible in official data and absent from corporate balance sheets. Second, policymakers must broaden their horizons beyond narrow research and development (R&D) subsidies. Modern innovation policy must embrace the full spectrum of intangible assets – spanning software, data, organizational capital, management capabilities, and brand equity –, while capitalizing on the vital synergies between them. Third, the scalable nature of intangible capital demands a synchronized approach to competition policy, innovation strategy, and corporate finance. Authorities must strike a delicate balance: cultivating the incentives and finance necessary to fuel intangible investments, while simultaneously preventing harmful market concentration and fostering broad diffusion of knowledge.