Investments in intangible assets and Australia's productivity growth

Research Project

Background

The rise of the 'knowledge economy' has brought productivity gains - but only in some firms, some industries and some countries. The diversity in performance improvement has focused attention on the role of investments in certain intangible assets (such as computerised information - for example, databases - innovative property - for example, patents and designs - and economic competencies - for example, 'organisational capital' that facilitates adaptation to change). There is a measurement issue - treating expenditure on intangibles as investment, rather than as a current expense, affects the amount of output (value added) and productivity measured. More fundamentally, intangible assets are seen as a necessary pre-condition for productivity gains. Specifically, investment in intangibles such as new organisational structures is needed in order to tap the productivity potential that information and communications technology presents.

Recent studies have attributed: an important part of the US productivity acceleration since the mid-1990s to intangibles assets; a lack of productivity uplift in the UK to mismeasurement (a period of seemingly-low growth was actually a period of more rapid build-up of intangible assets); and a lack of productivity uplift in Japan to the lack of investment in intangibles.

Objectives of the Study

The overall objective of the study is to gain a better understanding of the nature, role and importance of intangibles in Australia's productivity performance. More specific objectives are: to identify and measure the types of intangible assets that are most relevant to Australia; to assess the contribution of intangible assets to Australia's economic performance; and to identify factors that have influenced the accumulation of intangible assets.