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Intangible capital and modern economies

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Title: Intangible capital and modern economies
Authors: Corrado, C
Haskel, J
Jona-Lasinio, C
Iommi, M
Item Type: Journal Article
Abstract: The production of goods and services is central to understanding economies. The textbook description of a firm, typically in agriculture or manufacturing, focuses on its physical "tangible" capital (machines), labor (workers), and the state of "know-how." Yet real-world firms, such as Apple, Microsoft, and Google, have almost no physical capital. Instead, their main capital assets are "intangible": software, data, design, reputation, supply-chain expertise, and R&D. We discuss investment in these knowledge-based types of capital: How to measure it; how it affects macroeconomic data on investment, rates of return, and GDP; and how it relates to growth theory and practical growth accounting. We present estimates of productivity in the US and European economies in recent decades including intangibles and discuss why, despite relatively rapid growth in intangible capital and what seems to be a modern technological revolution, productivity growth has slowed since the global financial crisis.
Issue Date: 1-Aug-2022
Date of Acceptance: 1-Aug-2022
URI: http://hdl.handle.net/10044/1/99064
DOI: 10.1257/jep.36.3.3
ISSN: 0895-3309
Publisher: American Economic Association
Start Page: 3
End Page: 28
Journal / Book Title: Journal of Economic Perspectives
Volume: 36
Issue: 3
Copyright Statement: Copyright 2022 American Economic Association. All rights reserved.
Sponsor/Funder: Economic & Social Research Council (ESRC)
Economic and Social Research Council
Economic and Social Research Council
Funder's Grant Number: ES/V009478/1
Keywords: Economics
14 Economics
Publication Status: Published
Open Access location: https://www.aeaweb.org/articles?id=10.1257/jep.36.3.3
Appears in Collections:Imperial College Business School