U.S. more than $3 trillion of business intangible capital stock. How about the moolah the US makes in intangible investments?
Wife bought a pair of Converse All Stars in Yellow and green to complete their World Cup kit. I look and: Made under license from Converse.
While other countries break their back working, the US, just seat down and relax repatriating profits:
Published macroeconomic data traditionally exclude most intangible investment from measured GDP. This situation is beginning to change, but our estimates suggest that as much as $800 billion is still excluded from U.S. published data (as of 2003), and that this leads to the exclusion of more than $3 trillion of business intangible capital stock. To assess the importance of this omission, we add capital to the standard sources-of-growth framework used by the BLS, and find that the inclusion of our list of intangible assets makes a significant difference in the observed patterns of U.S. economic growth. The rate of change of output per worker increases more rapidly when intangibles are counted as capital, and capital deepening becomes the unambiguously dominant source of growth in labor productivity. The role of multifactor productivity is correspondingly diminished, and labor's income share is found to have decreased significantly over the last 50 years.
SOURCE: Intangible Capital and Economic Growth
Carol A. Corrado, Charles R. Hulten, Daniel E. Sichel
NBER Working Paper No. 11948
Issued in January 2006
NBER Program(s): EFG PR
nber.org
We have to break our backs to make ethanol, dig for Iron ore, harvest oranges concentrate and freeze, plant soy beans, make power trains, build infra for transport all that!
The US only rakes in the cash.
No wonder there's this huge mass migration for the people go there and enjoyy the money!!!!!!
US return to its natural size but ejoying!
The paper conclusions:
V. Conclusion: It’s the Knowledge Economy
The rapid expansion and application of technological knowledge in its many forms
(research and development, capital-embodied technical change, human competency, and the
associated firm-specific co-investments) is a key feature of recent U.S. economic growth.
Accounting practice traditionally excludes the intangibles component of this knowledge capital
and, according to our estimates, excludes approximately $1 trillion from conventionally measured
nonfarm business sector output by the late 1990s and understates the business capital stock by
$3.6 trillion. The current practice also overstates labor’s share of income by a significant amount
and masks a downward trend in that share. Our results also suggest that the inclusion of
intangibles both as an input and as an output can have a large impact on our understanding of
economic growth. We have found that the inclusion of intangible investment in the real output of
the nonfarm business sector increases the estimated growth rate of output per hour by 10 to 20
percent relative to the base-line case which completely ignores intangibles. Thus, the inclusion of
intangibles matters for labor productivity growth rates, although it has little effect on the
acceleration of productivity in the 1990s. On the input side, intangibles reached parity with
tangible capital as a source growth after 1995, and when the two are combined, capital deepening
supplants MFP as the principal source of growth. Moreover, the majority of the contribution of
intangibles comes from the non-traditional categories of intangibles identified in this paper.
It is also worth noting that the fraction of output growth per hour attributable to the old
“bricks and mortar” forms of capital investment (labeled “other tangible” capital in the lower
panel of table 5) is very small, accounting for less that 8 percent of the total growth in the period
1995-2003. While it is inappropriate to automatically attribute the other 92 percent to
“knowledge capital” or “the knowledge economy,” it is equally inappropriate to ignore the
association between innovation, human capital, and knowledge acquisition, on the one hand, and
investments in intangibles, IT capital, labor quality change, and multifactor productivity, on the
other.
That intangibles, and more generally, knowledge capital should be such an important
driver of modern economic growth is hardly surprising, given the evidence from every day life
and the results of basic intertemporal economic theory. What is surprising is that intangibles have
been ignored for so long, and that they continue to be ignored in financial accounting practice at
the firm level. The results presented this paper are intended to illustrate the potential magnitude
of the bias arising when they are excluded from economic growth accounting. In the process, we
have been forced to make a host of assumptions about many empirical issues, in order to measure
such items as output deflators and non-market inputs like firm-specific organization and human
competencies. Further research will undoubtedly find better ways to deal with these issues, and
future data collection efforts will evolve to fill the gaps that this paper only traverses lightly.
However, while our results are clearly provisional, we are also mindful of the famous dictum of
John Maynard Keynes that it is better to be imprecisely right than precisely wrong. |
