Presenters throughout the day characterized the role and value of intangible assets, both to firms and industries and in terms of their macroeconomic implications. Similarly, the way that intangible assets are measured, or not, potentially has a significant impact on the statistics calculated and used for monitoring the performance of the economy. Rigorous measurement of intangibles can lead to improved accuracy of estimates of gross domestic product (GDP) and the ability to identify sources of economic growth.
Brent Moulton, in explaining the rationale for classifying expenditures on intangibles as capital formation, noted that economic theory strongly suggests that investment in such assets is similar to tangible investment in terms of its effect on reducing current consumption and increasing future output. Consistency in national accounting requires that assets with these shared qualities be treated analogously. As noted above, certain types of intangibles, such as computer software, are already capitalized in the national accounts. Although rents and royalties and the services output associated with knowledge assets are included in the economic accounts, the production of all knowledge assets is not.
The major thrust of Steven Landefeld’s presentation dealt with the measurement challenges facing BEA and the priorities for confronting them to improve data on intangibles. In order to provide a sense of the magnitude of the issue, Landefeld first summarized preliminary results that have emerged from the NSF/BEA R&D satellite account (discussed in greater detail in the next section). Of particular note is the observation that the impact on the broader economy of R&D appears to be expanding: Between 1959 and 2004, R&D accounted for 5 percent of growth in real GDP, whereas, for the period 1995-2004, its contribution rose to 7 percent. If spillovers (the residual unexplained portion of growth) from R&D are, as research suggests, at least as large as the direct returns, this means that R&D may account for one-sixth of total factor productivity growth.1 Landefeld cautioned that, while substantial progress in measurement has been made and preliminary results indicate an influential role for R&D in the economy, a number of questions are unanswered about these statistics and much remains unmeasured.
Next, Landefeld reviewed some of the data (see Table 5-1) from the research by Corrado, Hulten, and Sichel (CHS) that has specific implications for BEA’s immediate programs. A portion of the capital spending itemized in the table is already captured in the national accounts (e.g., the above-mentioned software), and methods for handling additional components are being advanced in the satellite R&D accounts. Landefeld stated that the pieces that BEA is particularly interested in pushing further are nonscientific R&D (2b) and firm-specific investment (parts of 3b), in particular, human capital. For practical reasons, BEA does not plan to put significant effort into measurement of the brand equity arising from