TABLE 1 Real Growth Rate in Per Capita GDP at Purchasing Power Parity (Percent)

 

1960-1970

1970-1980

1980-1985

1985-1992

United States

2.5

1.6

1.6

1.2

Japan

8.9

3.2

3.0

3.5

Germany

3.4

2.5

1.3

2.4

France

4.4

2.6

1.0

1.9

United Kingdom

2.2

1.8

1.9

1.6

SOURCE: Organization for Economic Cooperation and Development (OECD),National Accounts Annual.

nearly 3 percentage points below the level of 1982, at the bottom of one of the deepest post-war recessions. Table 3 compares net national saving in the United States with that of other industrialized nations. The U.S. rates have always been the lowest, but in the late 1980s and early 1990s the gap between the United States and Japan and Germany increased.

The pattern of a low and declining rate of saving is repeated in the rate of investment. Nonresidential fixed investment is shown in Table 4. The 1992 rate of U.S. plant and equipment investment hit a 30-year low of 9.2 percent of GDP (see Table 2), all but 1 percent of which represents depreciation (the rate at which productive capital wears out or is retired from service). In 1993 it grew only slightly, to 9.8 percent of GDP.

Although reliable comparative data on private intangible investments other than research and development (R&D) are lacking, on the basis of anecdotal evidence and from its understanding of characteristic methods of financing different kinds of investment, the board believes it likely that the decline in U.S. corporate intangible investments has exhibited a similar pattern, although not uniform across industries or firms. The decline of U.S. business expenditures on R&D as a share of GDP in the late 1980s and its plateau in the early 1990s are consistent with this observation (Table 5), although it should be emphasized that R&D represents a small part of intangible private investments.

Generally accepted accounting rules require that most intangible investments made to develop new markets be reported as expenses rather than as investment. These expenses, therefore, reduce reported earnings even though they do not pertain primarily to a company’s current operations. Thus, companies desiring to show higher reported earnings may choose to forego intangible investments that will produce returns some



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