Intangible investment in the EU and US before and since the Great Recession and its contribution to productivity growth
By Carol Corrado, Jonathan Haskel, C. Jona-Lasinio, Massimiliano Iommi. 2018
131 citations recorded by the source corpus.
This paper uses a new cross-country cross-industry dataset on investment in tangible and intangible assets for 18 European countries and the US. We set out a framework for measuring intangible investment and capital stocks and their effect on output, inputs and total factor productivity. The analysis provides evidence on the diffusion of intangible investment across Europe and the US over the years 2000-2013 and offers growth accounting evidence before and after the Great Recession in 2008-2009. Our major findings are the following. First, tangible investment fell massively during the Great Recession and has hardly recovered, whereas intangible investment has been relatively resilient and recovered fast in the US but lagged behind in the EU. Second, the sources of growth analysis including only national account intangibles (software, R&D, mineral exploration and artistic originals), suggest that capital deepening is the main driver of growth, with tangibles and intangibles accounting for 80% and 20% in the EU while both account for 50% in the US, over 2000-2013. Extending the asset boundary to the intangible assets not included in the national accounts (Corrado, Hulten and Sichel (2005)) makes capital deepening increase. The contribution of tangibles is reduced both in the EU and the US (60% and 40% respectively) while intangibles account for a larger share (40% in EU and 60% in the US). Then, our analysis shows that since the Great Recession, the slowdown in labour productivity growth has been driven by a decline in TFP growth with relatively a minor role for tangible and intangible capital. Finally, we document a significant correlation between stricter employment protection rules and less government investment in R&D, and a lower ratio of intangible to tangible investment.
Subfields: Economics and Econometrics, Political Science and International Relations, Strategy and Management
View Paper: https://www.semanticscholar.org/paper/8ea0098a6e02bc71122b4d178d493b0456ff4b99
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Citations in the corpus
- Declining Labor and Capital Shares (2020, background): “The category of intangible capital that is measured by Corrado et al. (2016) but is not included in the BEA data is called “Economic Competencies” and includes the value of all market research, advertising, training, and organizational capital.”
- Artificial intelligence, firm growth, and product innovation (2024, background): “Despite ongoing efforts to incorporate more comprehensive measures of intangibles in the U.S. at the national level (Corrado et al. 2016), most firm-level measures of intangible capital use cost items such as R&D and SG&A (e.g., Eisfeldt and Papanikolaou, 2013; Peters and Taylor, 2017; Crouzet and…”