The need for measures of intangibles investments at the firm level
A main focus of the GLOBALINTO project is on analyzing the underlying reasons behind the so-called “productivity puzzle” in EU countries, i.e. the slowdown in productivity growth despite apparent increases in knowledge creation and innovation, and promoting supply and demand side economic policies to improve economic growth. The relation between innovation and productivity is complex and can be influenced by a number of supply and demand factors; factors which are behind the many possible explanations that have been proposed for productivity slowdowns and possible policy responses.
One explanation is that the opportunities for innovation and productivity growth have declined; that the potential gains from innovation are now smaller and require stronger capabilities and greater effort to be realized (Cowen 2011; Gordon 2016). This explanation motivates a number of additional issues in order to better understand – and promote – innovation and its returns.
Among these are measuring intangibles investments in broad terms and their impact on innovation and productivity. And there are a number of dimensions that influence the economic impact of technological change and innovation, such as the rate of innovation, diffusion and novelty. Also, gains from innovation which depend on competences to exploit them, absorb them, may differ across the value chain. Global factors very important here, as are demographics and ICT.
Others argue that opportunities have not diminished, and that in particular information and communication technology (ICT) continues to offer great potential for innovation and productivity growth (Brynjolfsson and McAfee 2011, 2014; Brynjolfsson et al. 2017). However, as technologies and their applications become more complex, demands increase for organizational and other capabilities needed to develop and apply new ICT-based applications.
Other explanations point to slowdowns in corporate investment (“secular stagnation”) and the role of policy and other demand-related factors as barriers to productivity growth (Eichengreen 2015; Gordon 2015). Stagnation arguments first need to consider both tangible and intangible investments, the role of market factors, to what extent main economic policies have been a factor in productivity slowdowns, and to what extent demand-side policies (particularly innovation related) can be promoted in the future.