Productivity and intangible capital: new challenges for the growth agenda

Transcription

1 Productivity and intangible capital: new challenges for the growth agenda Cecilia Jona-Lasinio (Università LUISS Guido Carli e ISTAT) Università Cattolica del Sacro Cuore - CRANEC 4 Dicembre 2017, Milano 1 / 18

2 Defining intangible capital Broad category Type of Investment Na5onal Accounts Computerized Information Innovative Property Software development Database development R&D Mineral exploration Copyright development (artistic originals) Design and other product development costs Yes Economic Competencies Market research & advertising Business process investment Training & skill development No Source: Corrado, Hulten and Sichel 2005, / 18

3 still draw a correspondence between these assets across sectors. For example, Jarboe (2009) Knowledge based capital in the total economy defines public investments in brand as expenditures for export promotion, tourism promotion, and consumer product and food and drug safety (i.e, investments in product reputation). The correspondence for computer software, purchased investments in organizational capital, and function-specific worker capital (employer-provided training) is of course far closer. What are intangible asset in the total economy? Table 3: Knowledge Capital in a Total Economy Market Sector Nonmarket Sector Computerized Information Information, Scientific, and Cultural Assets 1 Software 1 Software 2 Databases 2 Open data Innovative Property 3 R&D, broadly defined to 3 R&D, basic and applied science include all NPD costs 4 Entertainment & artistic originals 4 Cultural and heritage, including 5 Design arch. & eng. design 6 Mineral exploration 5 Mineral exploration Economic Competencies Societal Competencies 7 Brands 6 Brands 8 Organizational capital 7 Organizational capital (a) Manager capital (a) Professional and manager capital (b) Purchased organizational services (b) Purchased organizational services 9 Firm-specific human capital 8 Function-specific human capital (employer-provided training) (employer-provided training) Note NPD=New Product Development, including testing and spending for new financial products and other services development not included in software or conventional science-based R&D. The circled items are rather di erent in a public sector context. Open data refers to information assets in the form of publicly collected data issued and curated for public use. This runs the gamut from patent records to demographic statistics and national accounts to geo- 3 / 18

4 Public and Private Gross Fixed Capital Formation ( ): a common trend? Government investment rates for the three advanced country groups (excluding the EU13) have gradually trended down over time and since 2004, EU figures have been rather low compared to the US. 35% 10% 8% 6% Forecast period % 25% Forecast period % 20% 2% 15% United States Japan EU-15 EU-13 United States Japan EU-15 EU-13 0% General Government GFCF 10% Private GFCG excluding General Governement Source: Corrado, Haskel, Jona-Lasinio (2017) 4 / 18

5 Intangible capital and productivity growth: a relevant link Literature on intangibles developed so far attempts to better understand the changing nature of modern economies ((Corrado, Hulten and Sichel, 2005, 2009), Nakamura (1999, 2001), Corrado, Haskel, Jona-Lasinio, Iommi (2013, 2016)) Empirical evidence shows that intangible capital accounts for one-fifth to one-third of labor productivity growth in the market sector of the US and EU economies....thus important distortions could emerge if intangible assets are not properly accounted for in National accounts: national income, saving and investment data could be understated thus biasing productivity accounts/analysis the role of the public sector can be examined from a new perspective 5 / 18

6 Aim Investigate the role of intangible capital as a source of growth in the public and private sectors and provide fresh evidence about the drivers of the productivity slowdown experienced by the advanced economies before and after the Great Recession. 6 / 18

7 Data Database with multiple dimensions: country, industry, institutional sector, time Harmonized measures of intangible assets (INTAN Invest and SPINTAN), other vars (EUKLEMS and NA) 20 industries (A-U Nace Rev 2), , so far 12 countries: US Big Northern Europe: DE, FR, UK Scandinavian: DK FI, SE Small Europe: AT, CZ, NL Mediterranean: ES, IT 7 / 18

8 Business sector intangibles US relatively more intangible intensive than the EU economies NA intangibles account for 4%-3% of GDP and new intangibles for 4%-4.5% US intangibles outpaced tangible investment 16% Intangible and tangible investment (%GDP, average ) 14% 12% 10% 8% 6% 4% 2% 0% US EU14 CZ-HU-SI-SK national accounts intangibles new intangibles total intangibles tangibles Source: Corrado, Haskel, Jona-Lasinio, Iommi (2016), "Growth, tangible and intangible investment in the EU and the US before and since the Great Recession", EIB Investment Report, / 18

9 Composition of business intangible investment Economic competencies are the main driver of intangible investment 8,0% Asset composition of intangible investment (%GDP, average ) 7,0% 6,0% 5,0% 4,0% 3,0% 2,0% 1,0% 0,0% US EU14 CZ-HU-SI-SK Software Innovative Property Economic Competencies Source: Corrado, Haskel, Jona-Lasinio, Iommi (2016), "Growth, tangible and intangible investment in the EU and the US before and since the Great Recession", EIB Investment Report, / 18

10 Business intangibles across industries 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% Intangible investment by industry (% officially measured industry value added, average ) 0% US EU14 CZ-HU-SI-SK Agriculture Industry Services (excl. Real estate) Source: Corrado, Haskel, Jona-Lasinio, Iommi (2016), "Growth, tangible and intangible investment in the EU and the US before and since the Great Recession", EIB Investment Report, / 18

11 Market and nonmarket intangibles: adjusted value added shares (2013) Non-market intangible investment (on this measure) is small. Overall (market and nonmarket) intangible investments account for 14% to 6% of value added with market and nonmarket sectors accounting on average for 8% and 1.5% respectively. 11 / 18

12 Tangible and intangible investment before and after the crisis: EU+US Post crisis, tangible investment experienced a prolonged slowdown while intangible investment recovered Tangible and intangible real investment, EU plus US Summed using PPPs, 2007=1 All Year Tangible Intangible Graphs by Country_group But this turns out to vary by country / 18

13 Tangible and intangible investment before and after the crisis: EU vs US Intangibles were relatively resilient during the crisis: but... US: Intangibles recovered fast EU: Intangibles recovered more slowly and current growth is slower Tangible and intangible real investment, EU v US Summed using PPPs, 2007=1 EU US Year Tangible Intangible Graphs by Country_group 13 / 18

14 Sources of growth model ln(q) (a) c,i,t = sl(a) c,i,m,t ln(l) c,i,m,t + s K(a) c,i,m,t ln(k) c,i,m,t where all vars are per hours worked and: +s R(a) c,i,m,t ln(r) c,i,m,t + ln(a) c,i,m,t c=country, i=industry, m=market-nonmarket sector, t=time, (a)=assets s = (P x X /P q Q): Q and shares consistent with (a) capitalized assets L is labor services, K is tangible capital, R is intangible capital ln(a) c,i,m,t is TFP measured as a residual With countries-industry-sectors-asset-years we have many results...so concentrate here on EU and US, where EU is weighted average of AT, DE, DK, ES, FI, FR, IT, NL, SE, UK. 14 / 18

15 Sources of growth ( ): market vs nonmarket Contributions to labor productivity growth: business sector IT DE ES _EU UK NL FI AT FR US ConDlnLH ConDlnKH NonICT ConDlnKH ICT ConDlnKH intan DlnTFP Contributions to labor productivity growth: public sector FI AT FR ES IT NL DE _EU US UK ConDlnLH ConDlnKH NonICT ConDlnKH ICT ConDlnKH intan DlnTFP 15 / 18

16 Sources of growth ( ): deviations from the US EU minus US Performance gap with US (All in % growth pa, per hour worked) Public NFBiz Public NFBiz Graphs by period DlnQH DlnLH DlnKH_ICT DlnKH_NonICT DlnK_intan DlnTFP 16 / 18

17 Spillovers from intangible capital Intangible capital has productivity spillovers beyond the well-documented effects of R&D Multifactor productivity growth and intangible capital ( blue dots, 2007 to 2013 red dots) FI MFP growth (diff log) IT DE ES IT DE NL AT FR SE AT NL FR ES UK SE UK US US FI Contribution of Intangible Capital Deepening to MFP growth Note and sources. Illustration of econometric results reported in Corrado, Haskel, and Jona-Lasinio (Oxford Bulletin of Economics and Statistics, 2017). Coverage is total economy excl. real estate based on the SPINTAN and INTAN-Invest databases. 2 Carol Corrado, The Outlook for the US Economy, Brookings, Mary 31, / 18

18 Conclusions A primary characteristic of intangible capital, widely supported by growth accounting and macroeconomic literature is to be growth promoting. This is because intangible investments likely generate spillovers to the economic systems being non rival and possibly non excludable. Such spillovers, if they exist, might be within the private sector and or between the public and private sectors. Data reveal that intangible and tangible investments have different sensitivity to the business cycle and across countries with intangibles relatively more resilient to financial shocks. Intangible capital can thus be a key policy variable in the growth agenda providing a large contribution both in the market and nonmarket sectors of the advanced economies. 18 / 18