COINVEST

:

Competitiveness, Innovation and Intangible Investment in Europe

28 th Brussels January 2010

Annarosa Pesole, Imperial College London

Project funded by the European Commission under the Seventh Framework Programme Grant No 217512

www.coinvest.org

Two big questions

Activity

Can we better measure new economy/knowledge economy/innovation activity?

Effect of that activity

What are the effects of this activity on output, productivity, employment etc.

Type of intangible investment Includes the following intangibles Current treatment in National Accounts

Computerised information (1) Computer software (2) Computer databases Innovative property (1) Scientific R&D (2) Mineral exploration (3) Copyright and license costs (4) New product development costs in the financial industry (5) New architectural and engineering designs (6) R&D in social science and humanities Economic competencies (1) Brand Equity (2) Firm-specific human capital (3) Organisational structure Both treated as investment Only (2) and (3) treated as investment None of these treated as investment

1,4 Ratio Intangible/tangible investment France Germany Portugal 1,2 1 0,8 0,6 0,4 0,2 0 Sweden United Kingdom

14 Share of investment on GDP, 2006 Intangible Investment 12 10 8 6 4 2 0 Sweden United Kingdom France Tangible Investment Portugal Germany

10 5 0

% of GDP

25 20 15 Computerised information Economic competencies Innovative property Tangible investment France Germany Portugal Sweden United Kingdom Bulgaria

10 5 0 30 25 20 15 Tangible investment intangible Investment France Germany Portugal Sweden United Kingdom

Intangible assets contribution to labour productivity growth: -UK: 0.7 pp over the period 1995-2006 MHW(2009) -France: 0.5 pp over the period 1995-2006 HMV(2008) -Germany: 0.4 pp over the period 1995-2006 HMV(2008)