Intangible Capital and Productivity Growth in European Countries

27 Pages Posted: 16 Oct 2010

See all articles by Cecilia Jona Lasinio

Cecilia Jona Lasinio

Italian Statistical Institute

Massimiliano Iommi

National Institute of Statistics (Istat) - National Accounts and Economic Analysis

Stefano Manzocchi

LUISS University; Luiss University - Department of Economics and Finance

Date Written: June 10, 2010

Abstract

Despite the recent financial crisis has put much emphasis on stabilization macro-policies and regulatory issues, long-term growth and labour productivity are still high in the international economic agenda, as they are crucial for living standards all around the globe.

“Intangible capital”, as it is currently defined has been neglected for a long time as a source of economic growth, although some of the items it includes had been recognized as relevant factor of social development.

In this paper, we measure intangible investment as proposed by Corrado, Hulten and Sichel (2006) and we analyze its contribution to economic growth in a set of European countries. We provide evidence on the role of intangible capital as a source of growth to contribute to the debate about the strong heterogeneity of the productivity performances in the European countries.

In this paper we use the preliminary estimates of intangible capital produced by the INNODRIVE project for a sample of European countries (Austria, Denmark, Finland, Germany, Italy, Netherlands, Portugal, Sweden and United Kingdom) for the period 1995-2005.

Our study shows that including intangible capital as a ”production factor” helps clarifying the sources of long-run growth. According to our preliminary estimates, in the most recent years, the intangibles have been a relevant source of growth across European countries so that they cannot be omitted from national account data. In particular, the “unexplained” component of macro-economic dynamics, the Total Factor Productivity, becomes less important, while physical capital turns out to be strongly complementary with intangible capital.

Keywords: Productivity growth, Intangible capital

JEL Classification: O4, O47

Suggested Citation

Jona Lasinio, Cecilia and Iommi, Massimiliano and Manzocchi, Stefano and Manzocchi, Stefano, Intangible Capital and Productivity Growth in European Countries (June 10, 2010). Available at SSRN: https://ssrn.com/abstract=1691985 or http://dx.doi.org/10.2139/ssrn.1691985

Cecilia Jona Lasinio (Contact Author)

Italian Statistical Institute ( email )

Via Cesare Balbo , 16
Rome
Italy

Massimiliano Iommi

National Institute of Statistics (Istat) - National Accounts and Economic Analysis ( email )

via A. Depretis 74/B
Rome 00184
Italy
+3946733163 (Phone)
+3946733157 (Fax)

Stefano Manzocchi

Luiss University - Department of Economics and Finance ( email )

Viale Romania, 32
Rome, 00197
Italy

LUISS University ( email )

Viale Romania, 32
Rome, 00197
Italy

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