1. I was asked today: if intangible capital deepening slows, is that a big effect on productivity growth? This is part of a broader question; what's the relative importance of intangible assets in accounting for productivity growth (value added per hour growth)?
2. Growth accounting allows a decompositition of labour productivity growth into the contributions of:
a. reallocation = workers moving between industries of different productivity levels
b. labour composition = increased skills, age and experience
c. ICT capital deepening = increased ICT capital (computers, comms equip) per hour
d. NonICT capital deepening = increased NonICT capital (buildings, vehicles, non-ICT plant) per hour
e. Intangible capital deepening = increased intangible capital (R&D, software, artistic originals, design, marketing, business process, training) per hour
f. TFP = increased total factor productivity (what's left over, which increased efficiency plus mismeasurement etc.)
Here are some results from our EUKLEMS-INTANProd database, in hopefully obvious notation. Countries are US, UK, EU (France, Germany, Spain, Italy, Denmark, Holland, Austria, Sweden, Finland). Industries are all ommiting A (agriculture), OPQ (defence, education, health), B (mining), D-E (gas, electricity, water), F (construction). All these are not well measured, and/or mostly public sector.
As the results show, intangible capital deepening is much the most important contributor to labour productivity growth in the 2011-19 period (tangible capital deepening contributions is the sum of ICT and NonICT, which is still lower than the intangible contribution).
Table: of contributions
And a picture
