Intangibles, mismeasurement and the international productivity slowdown

We study if part of the recent international productivity slowdown can be ascribed to intangibles. Over the Great Recession both tangible and intangible investment fell, but intangible investment fell less and recovered much faster. This might a ect measured TFP growth via a combination of reduced spillovers (if any) from intangibles and mismeasurement of GDP. Using a 16 country dataset, and proxying intangibles by R&D (for which we have up-to-date data) we document (a) a slowdown in R&D capital services growth and (b) an increasing di erence between R&D investment growth and GDP growth that worsens mismeasurement biasing GDP growth down. We set out a framework showing biases to measured ∆lnTFP from omitted intangibles, spillovers and capitalisation e ects. Estimates suggest a slowdown in ∆lnTFP of 1pppa between 2011-4 and 2000-7, of which declining intangible capital services contributed 0.4pppa and value added mismeasurement 0.2pppa. ∗We thank the EU SPINTAN project, grant No. 612774 for nancial support. Data used here is based on joint work with Carol Corrado, Cecilia Jona-Lasinio and Massimiliano Iommi. Errors are my own. †Imperial College, CEPR and IZA; Address: Imperial College Business School, South Kensington Campus, London SW7 2AZ, United Kingdom; Email: [email protected].