Investment in Intangible Assets in Bulgaria

This paper presents results of the breakthrough study that applies the methodology developed by Corrado, Hulten and Sichel in 2006 to measure investment in intangible assets in Bulgaria and the factors involved in their contributions at the level of the economy. The study encompasses the transition and EU pre-accession period 1995-2006 and makes use of micro-level data aggregated to sector level, taking account imports and exports. We consider the following types of investment in intangible assets: computer software and computerized databases, innovative property, scientific R&D, copyright and license costs, new architectural and engineering design, brand equity and economic competences, market research and advertising as brand building, firm-specific human capital and organizational structure. According to this nomenclature, we compute the share of these intangible assets in the GDP and make estimates of the potential adjustment of the GDP if these investments were to be taken into account. The study unfolds on the background of the profound changes taking place in the Bulgarian economy over the 1990s, including a critical mass of privatisation, fragmentation of industries, financial shocks and a massive entry of new firms and foreign investment.