1. Private and Public Intangible Capital:
Productivity Growth and New Policy Challenges
C. Corrado, (The Conference Board), New York
J. Haskel, (Imperial College, CEPR and IZA), London
C. Jona-Lasinio, (LUISS Lab and ISTAT), Rome
ASSA -SGE
3 January 2015, Boston
This project has received funding from the European Union’s Seventh Framework Programme for
research, technological development and demonstration under grant agreement No. 612774
C. Jona-Lasinio SPINTAN 1 / 13

2. Aim
Complete the coverage of intangible investment by industry making
possible analysis of productivity for the total economy based on a
complete accounting of intangible capital inputs.
• Existing measures of intangible investment, INTAN-Invest, cover
a subset of industries: the market sector
• SPINTAN covers the nonmarket sector
• New conceptual and measurement challenges
• Identify the asset boundary in the total economy
• Impute a rate of return to public capital formation
• Investigate behavioural link public to private and vice versa
(e.g. role of public sector R&D on private sector)
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3. Investment slowdown: a common trend?
0%#
2%#
4%#
6%#
8%#
1970# 1975# 1980# 1985# 1990# 1995# 2000# 2005# 2010# 2015#
United#States## Japan## EU812#
EU#Core#9# EU#Cohesion#4#
forecast#period#201482016#
10%#
15%#
20%#
25%#
30%#
35%#
1970# 1975# 1980# 1985# 1990# 1995# 2000# 2005# 2010# 2015#
United#States## Japan##
EU812# EU#Core#9#
EU#Cohesion#4#
forecast#period#201482016#
Note: EU Core 9 is Austria, Belgium, Denmark, Finland, France, Germany, Italy, Netherlands, and the United
Kingdom. EU Cohesion 4 is Greece, Ireland, Spain and Portugal. EU-12 are the 12 member states that
joined the EU between 2004 and 2007.
Data sources: AMECO,
OECD.stat
GFCF % of GDP, 1970-2016
General government Private sector (includes SOEs)
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4. Our contribution
Some education and health is a mix of private and public, market and
non-market. So to do market sector analysis, one should really break
education and health into market and nonmarket.
• And one should really do this for all other industries too.
• What do we do?
• We focus on a number of industries that potentially have
significant non-market involvement.
• We break those industries into market and non-market.
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5. The scope of intangible assets used by the public sector:
industries of interest
laboratories, public parks and museums) in many countries; see table 1 below. The use of “mar-
ket” vs. “nonmarket” groupings of industries is thus not precise because an industry can reflect
activity carried out by a mix of producers, as is evident with NACE Section R and the larger
section of which NACE Section MB is a part.4
Table 1: SPINTAN Industries of Interest
nace nace
section Industry title number
MB Scientific research and development 72
O Public administration and defence; compulsory social security 84
P Education 85
QA Human health activities 86
QB Residential care and social work activities 87-88
R Creative, arts and entertainment activities;
libraries, archives, museums and other cultural activities 90-91
Gambling and betting activities;
sports activities and amusement and recreation activities 92-93
Note—NACE Rev. 2.
Before we leave the subject of NACE-defined industries, it must be said that in some countries
there are industries with significant government or nonmarket production besides those listed
in table 1. These tend to be industries that engage in activities not germane to our topic areas,
Besides Public administration and defence, other industries in the
table contain a mix of market and nonmarket producers.
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6. Multiple measurement dimensions of Public intangibles
!CHS!intangible!assets!
Nonmarket!sector!4!industries!
!Informa9on,!
Scien9fic!and!
Cultural!assets!
Societal!
Competencies!
NA!intangibles!(So$ware,*
R&D,*Mineral*explora4on)*
Non!NA!intangibles!(Open*
data,*Cultural*and*heritage,*
including*design,*Brands,*
Organiza4onal*capital,*
Func4onBspecific*human*
capital)*
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7. Intangible investment in the total economy:
measures developed so far
Two sets of intangible measures by industry and institutional sector:
CHS type assets (Data and Trends)
(Brands, Organizational capital, Design and Training)
• Geographical coverage:
(AT, BE, DE, ES, FI, FR, IT, NL, SE, UK)
• Time coverage: 1995-2010
CHS type assets and NA intangibles (SOG analysis)
• Geographical coverage: (DE, ES, FI, IT, UK)
• Time coverage: 1995-2009
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8. Intangible shares of Total value added
Overall selected intangible investment accounts for nearly 6% to
below 3% of total value added with private and public sectors
accounting on average for 4% and 0.7% respectively.
0.00#
1.00#
2.00#
3.00#
4.00#
5.00#
6.00#
uk# nl# be# se# fr# de# fi# it# at# es#
Nonmarket# 0.66# 0.37# 0.20# 0.06# 0.32# 0.36# 0.46# 0.38# 0.24# 0.16#
Market## 5.05# 5.20# 5.27# 5.19# 4.83# 4.37# 3.49# 3.53# 3.45# 2.65#
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9. Intangible shares of Non-Market and Market value added
In all countries the “intensity” of intangible investment in the market
sector exceeds that in the non-market sector (for these assets).
But there is also interesting variation between countries.
0.00#
1.00#
2.00#
3.00#
4.00#
5.00#
6.00#
7.00#
uk# de# fi# it# at# fr# nl# be# es# se#
NMKT# 4.15# 2.86# 2.42# 2.21# 1.78# 1.63# 1.62# 1.33# 1.12# 0.43#
MKT# 5.99# 5.00# 4.32# 4.26# 3.98# 6.00# 6.76# 6.21# 3.08# 6.05#
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10. Contributions to Labour Productivity Growth:1995-2009
In advanced economies (Germany, UK and Finland) intangible capital
provides a relevant contribution to nonmarket productivity growth.
!1.00%
!0.50%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
es%mkt% es%nmkt% demkt% de%nmkt% it%mkt% it%nmkt% uk%mkt% uknmkt% fi%mkt% fi%nmkt%
TFP% !0.43% 0.42% 0.61% 0.53% !0.34% 0.52% 0.73% 0.02% 2.08% 0.36%
ICD% 0.29% 0.18% 0.29% 0.65% 0.17% !0.02% 0.64% 0.34% 0.63% 0.25%
TCD% 0.92% 0.41% 0.57% !0.02% 0.54% 0.17% 0.81% 0.66% !0.21% !0.65%
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11. Contributions to Labour Productivity Growth:
1995-2007 vs 2007-2009
At the very beginning of the financial crisis, intangible capital
positively supported labour productivity growth of both market and
non-market sectors in the advanced economies.
!1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
Contribu1ons%to%Labour%Produc1vity%Growth:%
1995!2007%%
TCD$ ICD$ TFP$
!6.00%
!5.00%
!4.00%
!3.00%
!2.00%
!1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
Contribu1ons%to%Labour%Produc1vity%Growth:%
2007!2009%
TCD$ ICD$ TFP$
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12. Total Factor Productivity Growth (1995-2007) and market and
non-market intangible capital deepending contributions
Fi NonM
Fi Mkt
UK NonM
UK Mkt
It NonM
It Mkt
De NonM
DE Mkt
Es NonM
Es Mkt
01234
DlnTFP
0 .2 .4 .6 .8
Contrib DlnK(intang)/H
Market and non-market DlnTFP
De
Es
Fi
It
UK
01234
DlnTFP
.2 .3 .4 .5 .6 .7
Contrib DlnK(intang)/H, Mkt
Market DlnTFP
De
Es
Fi
It
UK
01234
DlnTFP
0 .2 .4 .6
Contrib DlnK(intang)/H, Non-Mkt
Market DlnTFP
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13. Policy challenges
• A primary characteristic of intangible capital, widely supported by
growth accounting exercises and macroeconomic studies, is to be
growth-promoting.
• This is because intangible investments likely generate spillovers to
the economic system 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 sector.
• In the light in particular of the claim and counter-claim around
public sector austerity and fiscal policy in Europe, it would be
vital to know which, if any, public sector intangibles had positive
spillovers to the rest of the economy.
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