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Table 9 Intangible investment and capital by category Business intangible investment Development-related intangible investment Computerised information Human capital Innovative property: Social capital: - R&D based on scientific knowledge - degree of trust in society - Non-scientific commercial R&D - ability to work for common purposes Investment in organizational capabilities: Governance: - strategic planning - judicial system - redesigning existing products - property rights - investment in brand names - legitimacy of governments Investment in firm-specific human competencies Other assets: NFA + omissions in evaluating (management and professional) other forms of capital 4.4.3. Impact of business intangible capital on growth In this section, we follow the work of Corrado, Hulten and Sichel (Intangible Capital and Economic Growth, 2006) relating to the United States, which is one of the most advanced pieces of research to date. They take GDP levels and growth rates in national accounts that treat most intangibles as intermediary products and compare these with the figures that might have been reached had the accounts posited the alternative assumption of intangibles as productive assets. Their methodology is described in Box 3. This growth accounting exercise delivers impressive results. Capitalising intangibles increases the rate of growth of output per hour, both in the 1973-95 and 1995-2003 periods, such that the level is 20 percent higher than in national accounts at the end of the first period and 11 percent higher at the end of the second period. The role of capital in labour productivity is substantially increased when intangibles are included. Conversely, TFP growth declines in importance. The Solow paradox is resolved since the role of capital in the acceleration of productivity growth linked to the IT revolution is much larger with intangible capital. Last but not least — and contrary to well-anchored beliefs — firm-specific resources (organisational competencies, firm-specific human competencies and commercial innovative property) have had the most impact, while scientific R&D has had a much lesser impact. December 2011 / Measure for Measure / How Well Do We Measure Development? / © AFD [ 203]
Box 3 The notations have already been defined earlier. Two approaches to growth accounting are compared: one that classifies intangibles as intermediate input and the other as capital. Intangibles as intermediate input Three branches of the economy produce goods C, I and N with two factors of production, L and K, allocated to all three goods and N to C and I. The production functions are: N = F N(LN,KN) I = F I (LI ,KI ,NI) C = F C(LC,KC,NC). Assuming that the factors of production are paid the value of their marginal productivity, the income identities are: P NN = P LL N + p kK N) P I I = P LL I + p kK I+ p NN I P CC = P LL C+ p kK C + p NN C. Under the assumption that all intermediary input markets clear, N is both an output and an input for producing other commodities. It disappears in the aggregate of GDP identity: P yY = P CC + P I I = P LL + p kK. In conventional national accounting, the GDP growth rate (gY) is the sum of the TFP growth rate (�) and the weighted sums of the contributions of the growth rates of the factors of production. The weights are their shares in GDP assumed to be equal to the corresponding output elasticities. g Y = s C g C + s I g I = s Lg L+ s Kg K +�. Intangibles as capital The output of intangibles appears in the production functions of C, I, N as cumulative stock R. The production functions are: N = F N(LN,KN,RN) I = F I (LI ,KI ,RI) C = F C(LC,KC,RC). The income identities in the three branches are: P NN = P LL N + p kK N +p RR N) P I I = P LL I + p kK I+ p RR I P CC = P LL C +p kK C +pRR C. The GDP identity: Intangible capital and growth accounting P yY = P CC + P I I + P NN = P LL + p kK + p RR. [ 204] © AFD / Measure for Measure / How Well Do We Measure Development? / December 2011
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Measure for Measure How Well Do We
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[ Disclaimer] Publications Director
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Table of Contents Acknowledgements
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Introduction François Bourguignon,
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The 2010 UNDP report on human devel
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1. Measuring Development: Different
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More data, better data and a broade
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•The PPPs are currently revised o
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1.1. More data, better data: benefi
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Organization undertakes the World P
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able through the DHS system, as wel
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1.2. The 2005 revision of the ICP a
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international dollars. The line is
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only thing that changes the counts
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Table Countries 1 15 reference coun
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y India and China, where about half
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This is because the PWT uses a Gear
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price level is the ratio of the pur
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meeting the demands of disease and
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In contrast to the calorie decline,
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1.3.4. Asking about not having mone
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Table 3 All countries Estimated num
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1.4. From many to one: single index
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expectancy and per capita income
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DEATON, A. (2008), “Income, healt
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STEVENSON, B. and J. WOLFERS (2008)
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2. Multidimensional Poverty and its
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dimensional Poverty Index. While th
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erty in most countries, but is sign
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The first methodology in Figure 7 e
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more completely their characteristi
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2.1.3. Unfolding M0 A relevant feat
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2.2. One particular application of
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Whenever the poverty cutoff k requi
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deprivation in child mortality and
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2.3. Research questions and debates
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Table Identification Method Union a
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There are three kinds of combinatio
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from different data sources; data f
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Because of its construction, analys
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2.4. Concluding remarks This paper
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ATKINSON, A.B. and F. BOURGUIGNON (
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ERIKSON, R. (1993), "Descriptions o
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RAWLS, J. (1971), A theory of justi
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Comment: Multidimensional Poverty a
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Data Already existing surveys provi
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Taking a longer historical view und
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3. Will GDP Growth Increase Subject
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political scientists. However, most
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instruments/instrument.php for a su
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• Life expectancy/income: “A pe
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clude that: “Overall, the average
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period. A similar graph appears in
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Mean life satisfaction Figure 11.C
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Figure 12 GDP, and the average and
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3.1.2. The diminishing returns to i
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3.1.3. “Rather than diminishing m
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3.1.4. Is the time-series correlati
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Figure The happiness trend in Mexic
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A note on statistical power The dis
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Satisfaction Figure 15.B. Happiness
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Life Satisfaction Life Satisfaction
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Life Satisfaction 7.62 7.3 7.08 6.8
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insignificant in a well-being equat
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p.21). Whether the co-movements bet
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Mean happiness in survey (0-10 scal
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One important note that can be made
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well-being regressions in which bot
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and relative to the income they ear
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(2010), dummy variables for one’s
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3.3.2 Adaptation Adaptation and the
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Knight and Gunatilaka (2009) is an
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Life expectancy at birth Infant mor
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Average number of children per woma
Page 154 and 155: Infant mortality per 1 ,000 live bi
Page 156 and 157: Trust 8 6 4 2 Evolution of trust We
Page 158 and 159: gradient across countries, if incom
Page 160 and 161: Table Last year Min. Max. Source Fi
Page 162 and 163: The income-happiness nexus: sources
Page 164 and 165: References AKAY, A. and P. MARTINSS
Page 166 and 167: COJOCARU, A. (2010), “On relative
Page 168 and 169: FREY, B.S. and A. STUTZER (2000),
Page 170 and 171: MCBRIDE, M. (2001), “Relative-inc
Page 172 and 173: Comment: Will GDP Growth Raise Well
Page 174 and 175: is relatively uncontroversial as an
Page 176 and 177: Again, perhaps one ought to advise
Page 178: 4. “Sustainable Growth”: Do We
Page 181 and 182: ethical matter and needs to espouse
Page 183 and 184: Adjacently but independently of the
Page 185 and 186: 4.1. National income and social wel
Page 187 and 188: In 1970, William Nordhaus and James
Page 189 and 190: 4.2. The challenge of sustainabilit
Page 191 and 192: nerable to uncontrollable diverging
Page 193 and 194: The final goods and services genera
Page 195 and 196: Since the variation of total real n
Page 197 and 198: It is to be noted that the discount
Page 199 and 200: This difference is such that the di
Page 201 and 202: 4.4. Sustainable growth: measuring
Page 203: Human capital is embodied in people
Page 207 and 208: 4.5. Sustainable growth: measuring
Page 209 and 210: the marginal utility of income and
Page 211 and 212: non-felling of trees. This non-use
Page 213 and 214: Box 4 Cost-benefit approach The fun
Page 215 and 216: With respect to the exogenous techn
Page 217 and 218: duced on the pollution permit marke
Page 219 and 220: paths. The social discount rate is
Page 221 and 222: should then be converted into econo
Page 223 and 224: References AGHION, P., D. HEMOUS an
Page 225 and 226: KRAVIS, I., A. HESTON and R. SUMMER
Page 227 and 228: Comment: “Sustainable Growth: Do
Page 229 and 230: sustainable policies. It seems very
Page 231 and 232: References SHALIZI, Z. and F. LECOC
Page 234 and 235: AFD Agence Française de Développe
Page 236: Authors’ Biographies
Page 239 and 240: een that of relative utility or com
Page 241 and 242: What is AFD ? Agence Française de
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