Intangible Capital, TFP Growth and Green Shoots in New Productivity

In a nutshell, the article finds ative analysis of the productivity perfor- the oft-quoted magnitudes for the produc- mance of European economies, Japan, the tivity slowdown in the United Kingdom United Kingdom and the United States. [...] We find that the productivity slowdowns in In the standard neoclassical production the United Kingdom and the United States framework, changes in real output are prox- are exaggerated when measured using data imately determined by changes in factor in- starting in 1995 and that TFP growth in puts and changes in TFP, with the latter the United Kingdom, United States and attributed to structural (ex. [...] As before, how- duction boundary for intangibles in the an- ever, the trends for the rise in the invest- alytical module of EU KLEMS & INTAN- ment rates for intangibles in the United Prod versus that in national accounts, i.e., States is sharper and the trends for the the effect of adding the intangibles listed United Kingdom, United States and EU on lines 6 through 10 of Table 1 to those North ar. [...] The discussion below focuses primarily it faster or slower than existing real GDP? on the interpreting the productivity perfor- The side-by-side bars of Chart 3 compare mance of the advanced economies included labour productivity growth after capitaliz- in the EU KLEMS & INTANProd dataset ing all intangibles with labour productivity in the 12 years since the onset of the global growth based on off. [...] The “period of slower growth” contribution of intangible capital deepen- typically includes the years since the on- ing was maintained in the entire post-GFC set of the GFC in 2007, which as a cyclical period (except for the slowing in Japan be- event ended in 2009, so sometimes the pe- tween 2008-2013 and 2014-2019).