9 October 2007

Intangible investment and Britain's productivity: Treasury Economic Working Paper No. 1

This is the first in a new series of Treasury Economic Working Papers. The paper investigates the consequences for a range of macroeconomic variables, including productivity, of treating spending on intangibles as investment. The intangible assets considered are scientific R&D, software, design, non-scientific R&D and spending by firms on reputation, human and organisational capital. The results suggest that traditional measures of investment may not be capturing the dynamic changes in the economy that are taking place as knowledge-intensive industries increase in importance. Reported UK productivity performance improves when spending on intangibles is treated as investment and the UK is shown to be investing as much in intangible assets as in physical capital.

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Intangible investment and Britain´s productivity (PDF, 333KB)