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Intangible capital in Chinese regional economies: Measurement and analysis

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  • Li, Qing
  • Wu, Yanrui

Abstract

Intangible capital is treated as an important determinant of economic growth in the age of knowledge economy. It has however attracted less attention in China largely due to measurement impediment. This study aims to measure intangible investment and examine its contribution to regional economic growth in China. The results show that both the coastal and interior regions in China enjoyed high growth in intangible investment during 2003–2014, especially after the year 2008. Moreover, it is found that regional disparity in intangible capital is widening and that this trend is mainly driven by the enlarging gap in investment in computer software and architecture designs. In addition, it is observed that economic competency capital is neglected in both regions, implying generally poor enterprise management in China. When intangible capital is considered, growth accounting exercises show higher labor productivity growth together with a larger effect of capital deepening in both regions. Coastal regions tend to benefit more from intangible capital due to the advancement of computerization. If the contribution of computer software in the interior region was as large as that in the coast region, labor productivity growth of the interior would be 0.5 percentage points higher than its current level. Finally, the estimates of the contribution of total factor productivity to economic growth would be biased if intangible capital is not considered.

Suggested Citation

  • Li, Qing & Wu, Yanrui, 2018. "Intangible capital in Chinese regional economies: Measurement and analysis," China Economic Review, Elsevier, vol. 51(C), pages 323-341.
    • Handle: RePEc:eee:chieco:v:51:y:2018:i:c:p:323-341
    DOI: 10.1016/j.chieco.2017.07.002
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    More about this item

    Keywords

    Intangible capital; Total factor productivity; Regional economic growth; China;
    All these keywords.

    JEL classification:

    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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