Note: I am grateful for useful comments and suggestions by Lena Hagman, Jonathan Haskel, Henrik Jordahl, Annarosa Pesole, Erik Ruist, and participants at COINVEST seminars in Lisbon, Mannheim, Paris, and Stockholm. Financial support from the European Commission is also gratefully acknowledged.
CAN INVESTMENT IN INTANGIBLES EXPLAIN THE SWEDISH PRODUCTIVITY BOOM IN THE 1990s?
Article first published online: 15 MAR 2011
© 2011 The Author. Review of Income and Wealth © International Association for Research in Income and Wealth 2011
Review of Income and Wealth
Volume 57, Issue 4, pages 658–682, December 2011
How to Cite
EDQUIST, H. (2011), CAN INVESTMENT IN INTANGIBLES EXPLAIN THE SWEDISH PRODUCTIVITY BOOM IN THE 1990s?. Review of Income and Wealth, 57: 658–682. doi: 10.1111/j.1475-4991.2010.00436.x
- Issue published online: 16 NOV 2011
- Article first published online: 15 MAR 2011
In the early 1990s the Swedish economy experienced a severe economic and financial crisis which resulted in a substantial GDP decrease. Even though the crisis was not a complete surprise for many economists, almost no one expected that the Swedish economy would be prospering with booming productivity growth only a few years later. Economists have presented three explanations for the fast recovery and productivity growth in 1995–2006: market reforms, crisis recovery, and the impact of ICT. This paper offers an alternative view, emphasizing instead firms' substantial investment in intangible assets such as R&D, design, and advertising. Based on the growth accounting framework, intangible capital accounted for more than 30 percent of the labor productivity growth in the Swedish business sector from 1995 to 2006. Thus, Swedish TFP growth, one of the highest among OECD countries, is reduced substantially when investment in intangibles is included in the growth accounting analysis.