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Productivity and Growth in UK Industries: An Intangible Investment Approach


  • The authors are grateful for financial support from the National Endowment for Science, Technology and the Arts (NESTA) and the UK Innovation Research Centre, which is funded by the Economic Social Research Council (ESRC, UK), NESTA, the Technology Strategy Board and the Department for Business, Innovation and Skills (RES-598-28-0001). Goodridge is grateful for financial support from ESRC (Grant ES/I035781/1), and Dal Borgo gratefully acknowledges support received from the ESRC funded centre CAGE: Competitive Advantage in the Global Economy, Department of Economics, University of Warwick. We also thank Nick Oulton, Brian MacAulay and two anonymous referees for helpful comments. This work contains statistical data from ONS which is crown copyright and reproduced with the permission of the controller HMSO and Queen's Printer for Scotland. The use of the ONS statistical data in this work does not imply the endorsement of the ONS in relation to the interpretation or analysis of the statistical data.


This article calculates some facts for the ‘knowledge economy’. Using new data, first we document UK intangible investment and find that (i) this is greater than tangible investment by £37bn in 2008; (ii) R&D is 11% of total intangible investment, software 15%, and training and organizational capital 22% each; (iii) the most intangible-intensive industries are manufacturing and financial services. Next, we measure the contribution of intangible capital to growth for 2000–08. We find that intangible capital accounts for 23% of labour productivity growth and treating intangibles as investment lowers total factor productivity growth in the 2000s by 24% (R&D lowers it by 3%).

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