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Can Investment in Intangibles Explain the Swedish Productivity Boom in the 1990s?

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  • Edquist, Harald

    (Research Institute of Industrial Economics (IFN))

Abstract

After a severe crisis in the early 1990s, the Swedish economy experienced a boom in productivity growth. According to economists there have been primarily three explanations for the fast productivity growth in 1995–2004: Market reforms, recovery from the crisis and the impact of information and communication technology (ICT). This paper offers an alternative view by recognizing that firms make substantial investment in intangible assets such as R&D, design, advertising etc. These investments are not classified as investment in the National Accounts, where only tangible assets are defined as investment. This paper provides estimates of investment in intangible assets and uses the growth accounting framework to analyze the Swedish productivity boom. The results show that investment in intangibles was approximately 246 bn SEK in 2004 or 9 percent of GDP. Moreover, intangible capital accounted for almost 50 percent of labor productivity growth in the Swedish business sector 1995–2004. Thus, investment in intangibles was an important source to the Swedish productivity boom in 1995–2004.

Suggested Citation

  • Edquist, Harald, 2009. "Can Investment in Intangibles Explain the Swedish Productivity Boom in the 1990s?," Working Paper Series 809, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0809
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    Keywords

    Intangibles; Investment; Economic growth;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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