leading role of talent and intellectual capital as the intangible assets most important to future economic development.

Charles Hulten (University of Maryland) outlined the difficult issues that need to be resolved in defining and measuring intangibles. His research, along with that of Carol Corrado and Dan Sichel, his colleagues at the Federal Reserve (referred to in this volume as CHS), has shown that investment in intangible assets is larger than fixed capital investment, and that its inclusion in micro and macro statistics is essential to the task of explaining corporate valuation, measures of economic growth, total factor productivity, and indeed GDP. He laid out viable methodologies for advancing these measurement objectives and reported results from this area of research.

1.1.
MACROECONOMIC MEASUREMENT IMPLICATIONS

The second session of the day probed further into the macroeconomic implications of intangible assets. Carol Corrado (Conference Board and formerly the Federal Reserve), extending comments made by Hulten, discussed the CHS empirical results for the U.S. case. This research presents a clear and compelling case for treating tangible and intangible assets in a methodologically symmetric manner and for capitalizing the latter in the nation’s economic accounts. In this way, the portrayal of business activity is brought up to date by recognizing the role of innovation in the dynamic nature of production and capital accumulation in the modern economy.

The workshop encompassed international perspectives as well. Jonathan Haskel (Queen Mary College, University of London) presented evidence about the role of intangible assets using the CHS methodology applied to the economy of the United Kingdom. In the process, he identified several questions of concern for policy makers, business executives, and academics in the United Kingdom. Like Corrado, he concluded that including intangibles as investments makes a significant difference in measured economic activity and growth, although the patterns of intangible investment and sources of productivity growth are somewhat different from those detected for the United States; in addition, he reported high levels of interest, in both the measurement and the policy communities, in constructing an innovation index for the United Kingdom.

Kyoji Fukao (Hitotsubashi University and Research Institute of Economy, Trade and Industry) provided estimates of intangible investments in Japan and of their contribution to economic growth. His team’s research found the country’s economic growth, from the mid-1990s on, to be characterized by slow growth in total factor productivity in sectors with intensive information and communication technology (ICT); ICT investment was also found to be relatively stagnant. Following the measurement approach of the CHS team (2005, 2006a, 2006b), Fukao showed that, in comparison to the United States, Japan invests somewhat less in intangible assets. The Japan case is also characterized by high levels of



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