Dal Borgo, Mariela, Goodridge, Peter , Haskel , Jonathan and Pesole, Annarosa (2012) Productivity and growth in UK industries : an intangible investment approach. Working Paper. Coventry, UK: Department of Economics, University of Warwick. CAGE Online Working Paper Series, Volume 2012 (Number 88).

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Abstract

This paper tries to calculate some facts for the “knowledge economy”. Building on the work
of Corrado, Hulten and Sichel (CHS, 2005,9), using new data sets and a new micro survey,
we (1) document UK intangible investment and (2) see how it contributes to economic
growth. Regarding investment in knowledge/intangibles, we find (a) this is now greater than
tangible investment at, in 2008, £141bn and £104bn respectively; (b) that R&D is about 11%
of total intangible investment, software 15%, design 17%, and training and organizational
capital 22%; (d) the most intangible-intensive industry is manufacturing (intangible
investment is 20% of value added) and (e) treating intangible expenditure as investment raises
market sector value added growth in the 1990s due to the ICT investment boom, but slightly
reduces it in the 2000s. Regarding the contribution to growth, for 2000-08, (a) intangible
capital deepening accounts for 23% of labour productivity growth, against computer hardware
(12%) and TFP (40%); (b) adding intangibles to growth accounting lowers TFP growth by
about 15% (c) capitalising R&D adds 0.03% to input growth and reduces lnTFP by 0.03%
and (d) manufacturing accounts for just over 40% of intangible capital deepening plus TFP.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Investments -- Mathematical models, Knowledge economy, Economics -- Mathematical models
Series Name:	CAGE Online Working Paper Series
Publisher:	Department of Economics, University of Warwick
Place of Publication:	Coventry, UK
Official Date:	April 2012
Dates:	Date Event April 2012 Published
Volume:	Volume 2012
Number:	Number 88
Number of Pages:	54
Institution:	University of Warwick
Status:	Not Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Open Access (Creative Commons)
Date of first compliant deposit:	1 August 2016
Date of first compliant Open Access:	1 August 2016
Funder:	National Endowment for Science, Technology and the Arts (Great Britain) (NESTA), Economic and Social Research Council (Great Britain) (ESRC), University of Warwick. Department of Economics, Great Britain. Department for Business Innovation and Skills (DBIS)
Grant number:	ES/I035781/1 (ESRC) ; RES-598-28-0001 (DBIS)

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