How can we evaluate the contribution of intangible assets

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How can we evaluate the
contribution of intangible assets
on productivity growth ?
- Measurement in IO & SNA Masahiro KURODA
Economic and Social Research Institute
Cabinet Office, Japan
Story on Productivity Paradox
Productivity Paradox:
・R.Solow remarked in1987 that “you see the
computer revolution everywhere except in the
productivity data.”
Conceptualization Problem:
・Greenspan pointed out that the negative trends
in measured productivity in many service
sectors seemed inconsistency with the facts that
they ranked among the top computer-using
industries.
・Questions raised by Greenspan on the accuracy
of the computer price index.
Productivity Trends in 1990s
- U.S. vs. Japan and Europe Robert E. Rubin, former Secretary of the Treasury, pointed
out that the return of the productivity in the U.S. at the first
half of 1990s and raised several factors for the recovery.
1.
The restoration of sound fiscal policy.
2.
Advances in technology contributed to the US productivity
growth. Why Europe and Japan did not experience increased
productivity growth, although they had access to the same
technologies the US did in the 1990s.
3.
America’s culture and historical disposition to take risks and
embrace change.
4.
More flexible labor market .
5.
Openness of the market: Japan’s and Europe’s relatively less
open markets protected companies and reduced their incentive
to become more efficient.
-Contents・ At first, I will observe the facts on productivity growth
by commodity by 7 Japanese linked Input-Output
tables since 1960 and summarize recent features on the
productivity growth in Japan.
・ How to evaluate the contribution of intangible assets on
productivity growth.
/ Classification of intangible assets.
/ Treatment of intangible assets in current SNA and
Input-Output framework
・Software
・Innovative property
・Economic competencies
・Problems to be solved
Linked IO Tables and Related Data
・ Linked IO Tables
/60-65-70 Linked: 339
/65-70-75 Linked: 392
/70-75-80 Linked: 394
/75-80-85 Linked: 349
/80-85-90 Linked: 353
/85-90-95 Linked: 394
/90-95-00 Linked: 394
commodities
commodities
commodities
commodities
commodities
commodities
commodities
・Time-series Labor and Capital Service
(Keio Economic Observatory Data)
Input Quantity and price Index: 43 Industrial
sectors : (1960-2000)
Triangulation and Technology Linkage
Construction
Machinery
Electric Products
Metal Products
Food Products
Stone & Clay
Mnf. Final Prod.
Material Prod.
Energy
Auxiliary
Repairs
Service
Block Classification
Technology Linkage: Semiconductor production
Personal Computer etc.
Consump.
Invest.
Applied Electronics
Semiconductor
Non-ferrous Metal Prod.
Non-ferrous Mine
Other IT installed Machine
Productivity Analysis䋺
Commodity-base Own TFP
I-O Table
j-Industry
Intermediate
Input
Aij Xj
Capital
Input
Bij Xj
TFP ; Tj
䊶 Commodity-base
Commodity
䊶 Structural Change
X j , K j , Lj
䊶 Production Function
Xj =f ( Kj, Lj, Xij, Tj )
䊶 Own Total Factor Productivity
Labor
Input
Output
Lkj Xj
Xj
x
x
Tj Xj
Tj Xj
x
¦sxij
n
Xij
Xij
x
sLj
Lj
Lj
x
sKj
Kj
Kj
Unit Structure & Static Unit TFP
䊶Unit Structure
Intermediate
Input
Aij Xj
Capital
Input
Bij Xj
Labor
Input
Output
Lkj Xj
Xj
Taking f*=e(i), where e(i) denotes the i-th unit
Vector with a one in position I and all other entities
Equal to zero, the matrices of intermediate deliveries,
X*, labor L*, and capital K* required for producing
A single unit of final demand of commodity are given
as follows:
1 ª X t º ª At ( I At ) ft º
»
« » « L
1 Ut / f e
« Lt » « Bt ( I At ) ft »
t
(i )
« Kt » « B K ( I A )1 f »
t
t »
¬ ¼ «¬ t
¼
䊶
䊶
Ti
PjXj Tj
Ti
= 㰿j
PvV Tj
䊶 Aggregation of commodity-based TFP
K:Re pare s
L:Se rvi
J:A u xialry Produ c ts
H:Mate rial
G:Oth e r Man u fac tu rin g Fin al
Produ ct
F:Stone &Clay Prod.
E :Food
D:Me tal Produ c ts
-10
C:Electric & Electronic
-5
Commoditie s
B:Mac h in e ry & E qu ipme n t
-15
-20
A:Con stru c t
-25
Ow
Sta
%
L
L
L
L
L
K
K
J
J
J
J
I
H
H
H
H
H
G
G
G
G
G
G
G
G
F
E
E
E
D
D
C
C
B
B
B
B
A
Annual Rate of Own and Static TFP by Commodities during the per iod 60-65
20
15
10
5
0
Difference between Static Unit and Own TFP : 1960-1965
8
6
4
%
2
0
difference
1 11 21 31 41 51 61 71 81 91 101 111 121 131 141 151 161 171 181 191 201 211 221 231 241 251 261 271 281 291 301 311 321 331
-2
-4
-6
-8
Commodities
L :S e r v i c e
K :R e p a i r s
J :A u x i a r y P r o d u c t s
-15
-20
Commodi ti es
E :E n e r g y P r o d u c t s
H :M a t e r i a l
Prod u c ts
G :O t h e M a n u f a c t u r i n g F i n a l
Prod u c ts
F :S t o n e & C l a y P r o d u c t s
E :F o o d P r o d u c t s
-25
B :M a c h i n e r y & E q u i p m e n t
-10
A :C o n s t r u c t i o n
-30
C :E l e c t r i c & E l e c t r o n i c P r o d u c t s
D :M e t a l P r o d u c t s
Own TFP
Static TFP
-5
%
A
A
B
B
B
B
C
C
D
D
E
E
E
E
F
G
G
G
G
G
G
G
H
H
H
H
H
H
J
J
J
J
J
K
L
L
L
L
L
L
L
L
L
L
Annual Growth Rate of Own and Static TFP by Commodities during the period 65-70
20
15
10
5
0
Difference between Static Unit and Own TFP: 1965-1970
12
10
8
6
4
2
%
difference
0
1 12 23 34 45 56 67 78 89 100 111 122 133 144 155 166 177 188 199 210 221 232 243 254 265 276 287 298 309 320 331 342 353 364 375 386
-2
-4
-6
-8
-10
Commodities
-20
-25
-30
Commodi ti es
L :S e r v i c e
-15
K :R e p a i r s
H :M a t e r i a l P r o d u c t s
G :O t h e
M a n u f a c tu rin g F i n a l
Prod uc t
-10
Own TFP
Static TFP
-5
L
L
L
L
L
L
L
L
L
K
J
J
J
J
J
H H
H
H
G H
G
G
G
G G
F
E
E
E
D
D
J :A u x i a r y P r o d u c t s
25
C C
B
F :S t o n e & C l a y P r o d u c t s
5
B
E :F o o d P r o d u c t s
10
B
D :M e t a l P r o d u c t s
15
B
C :E l e c t r i c & E l e c t r o n i c P r o d u c t s
B :M a c h i n e r y & E q u i p m e n t
A :C o n s t r u c t i o n
20
A
A
%
Annual Growth Rate of Own and Static TFP by Commodities during the period 70-75
0
Difference betwen Static Unit and Own TFP : 1970-1975
5
0
1 12 23 34 45 56 67 78 89 100 111 122 133 144 155 166 177 188 199 210 221 232 243 254 265 276 287 298 309 320 331 342 353 364 375 386
%
-5
-10
difference
-15
Pe t r o le u m Ar o m at ic Pr o d.
-20
Pe t r o le u m Re fin ar y Pr o d .
-25
Commodities
-10
L :S e r v i c e
K :R e p a i r s
-30
-40
Commodi ti es
J :A u x i a r y P r o d u c t
H :M a t e r i a l P r o d u c t
G :O t h e r M a n u f a c t u r i n g F i n a l
Prod uc t
F :S t o n e & C l a y P r o d u c t s
E :F o o d P r o d u c t s
D :M e t a l P r o d u c t s
C :E l e c t r i c & E l e c t r o n i c P r o d u c t s
-50
B :M a c h i n e r y & E q u i p m e n t
-20
A :C o n s t r u c t i o n
-60
Own TFP
Static TFP
%
Annual Growth rate of Own and Static TFP by Commodities during the Period 75-80
30
20
10
0
A A B B B B C C D D D E E E F F G G G G H H H H H H J J J J K K L L L L L L L L L L L L
Difference between Static Unit and Own TFP: 1975-1980
10
5
0
1
11 21 31 41 51 61 71 81 91 101 111 121 131 141 151 161 171 181 191 201 211 221 231 241 251 261 271 281 291 301 311 321 331 341
-5
%
-10
-15
difference
-20
-25
-30
-35
st ar c h
-40
Commodities
-20
30
Commodi ti es
L : S e r v ic e
-10
J : A u x ia r y P r o d u c t s
H : M a t e r ia l P r o d u c t s
G : O t h e r M a n u f a c t u r in g
P ro du c ts
F :S t o n e & C la y P r o d u c t s
E :F o o d P r o du c t s
D :M e t a l P r o du c t s
40
A : C o n s t r u c t io n
20
B : M a c h in e r y & E q u ip m e n t
C : E le c t r i c & E l e c t r o n ic P r o d u c t
Own TFP
Static TFP
%
Annual Growth Rate of Own and Static TFP bt Commodities during the Period 80-85
50
10
0
A A B B B B B C C D D E E E E F G G G G G G H H H H H J J J J J L L L L L L L L L L L L L
Diffe re n c e s be twe e n Static Un it an d Own TFP : 1 9 8 0 - 8 5
25
20
No n - fe r r o u s m e t al P r o d.
%
15
10
difference
5
0
1
11 21 31 41 51 61 71 81 91 101 111 121 131 141 151 161 171 181 191 201 211 221 231 241 251 261 271 281 291 301 311 321 331 341 351
-5
Commodities
%
Annual Growth Rate of Own and Static TFP by Commodities during the Period 85-90
20
15
10
Own TFP
L :S e r v ic e
K :R e p a ir s
J :A u x u ia r y P r o d u c t s
H :M a t e r ia l P r o d u c t s
G :O t h e r
M a n u f a c t u r in g F in a l
P ro d.
D :M e t a l P r o d u c t s
E :F o o d P r o d u c t s
F :S t o n e & C la y P r o d u c t s
Commodi ti es
C :E le c t r ic & E le c t r o n ic
P ro du c ts
-5
B : M a c h in e r y & E q u ip m e n t
-15
A :C o n s t r u c t io n
-10
Static TFP
5
0
A A B B B B B B C C C D D D E E E E E F G G G G G H H H H H J J J J J J K L L L L L L L L L L L L L
De ffe re n c e be twe e n Static Un it an d Own TFP : 1 9 8 5 - 1 9 9 0
6
O t h e r n o n - m e t al i c o r e s
5
C o ppe r
Vi de o Fac i l i t y
4
%
3
2
difference
1
0
1
-1
12 23 34 45 56 67 78 89 100 111 122 133 144 155 166 177 188 199 210 221 232 243 254 265 276 287 298 309 320 331 342 353 364 375 386
P l ywo o d
S t ar c h
-2
Commodities
O c e an T r an s po r t
0
L : S e r v ic e
K : R e p a ir s
Co mmo ditie s
J : A u x ia r y P r o d u c t s
H : M a t e r ia l P r o d u c t s
G : O t h e r M a n u f a c t u r in g F in a l
P ro du c ts
F : S t o n e & C la y P r o d u c t s
E :F o o d P r o du c t s
D :M e t a l P r o du c t s
-25
C : E le c t r ic & E le c t r o n ic P r o d u c t s
-20
Static TFP
-5
B : M a c h in e r y & E q u ip m e n t
-15
A : C o n s t r u c t io n
-10
A A B B B B B B C C C C D D D E E E E F G G G G G H H H H H J J J J J J K L L L L L L L L L L L L L Own TFP
%
Annual Growth Rate of Own and Static TFP by Commodities
during the Period 90-95
20
15
10
5
Diffe re n c e s be twe e n Statric Un it an d Own TFP 1 9 9 0 - 1 9 9 5
8
Nu c l e ar Fu e l s
C u ppe r
6
P i g Ir o n
4
Ro l l e d & dr awn Al u m i n u m
T h e r m o pl ast i c s r e si n s
Co m m oditie s
PC
2
C o m pu t e r
Pu lp
系列1
0
1
12 23 34 45 56 67 78 89 100 111 122 133 144 155 166 177 188 199 210 221 232 243 254 265 276 287 298 309 320 331 342 353 364 375 386
-2
-4
T u r bi n e s
-6
%
%
Annual Growth Rate of Own and Static TFP by Commodities during the Period 95-00
25
20
15
10
L :S e r v ic e
K :R e pa r e s
J :A u x ia r y P r o du c t s
Co m mo dit ie s
H :M a t e r ia l P r o du c t s
G :O t h e r M a n u fa c t u r in g
F in a l P r o du c t s
F :S t o n e & C la y P r o du c t s
E :F o o d P r o du c t s
D :M e t a l P r o du c t s
-20
C :E le c t r ic & E le c t r o n ic P r o du c t s
-5
B :M a c h in e r y & E qu ipm e n t
-15
A :C o n s t r u c t io n
-10
Own TFP
Static TFP
5
0
A A B B B B B B C C C C D D D E E E E F G G G G G H H H H H J J J J J J K L L L L L L L L L L L L L
Differences between Static Unit and Own TFP 1995-2000
6
PC
C o m pu t e r
5
T u r bin e s
4
Vide o
3
T o ys & gam e s
Applie d Ele c t r o n ic e qu ip.
Diar y c at t le far m in g
%
Ho t r o ll st e e l
2
difference
1
0
1
-1
12 23 34 45 56 67 78 89 100 111 122 133 144 155 166 177 188 199 210 221 232 243 254 265 276 287 298 309 320 331 342 353 364 375 386
pu lp
-2
Commodities
Adve r t isin g
Changes of TFP Paterns During 1990-95
(Price) Own & Unit TFP : 95-00 年Domar Weight
(1)Both Own (b) &
(2) Own (b) is
Unit (a) TFPs are
positive, but Unit (a)
negative and
TFP is negative and
differences (a-b) is
differences (a-b) is
90-95
negative.
also negative.
(b)
(a)
(a-b)
(b)
(a)
(a-b)
0311-04 Marine Culture
1711-01 Wooden Funiture
and Fixtures
0213-01Special Forest
Products 031201 Inland Water Fisheries
and 1995-2000
(3)Both Own (b) &
Unit(a) TFPs are
positive,and
differences (a-b) is
negative.
(b)
(a)
(a-b)
(4) Both Own(b) &
Unit(a) TFPs are
negative, but differences
(a-b) is positive.
(b)
(a)
(a-b)
1521-01 Woven Fabric Apparel
4132-09 Other Civil Engineering
6112-01Reatl Trade 8519-09
Other Business Service 861201 General eating Places 861301 Hotel and Lodging Places
0112-02,0622-02,1113-03, 1119-02,112903,1141-01,1519-02,1813-01,191102,1911-03,2039-01,2039-02,207101,2071-02,2074-01,2079-09,231902,2411-01,2523-01,2599-02,301101,3011-03,3013-01,3019-01,301909,3021-01,3022-01,3024-02,302901,3029-02,3029-03,3029-04,302909,3031-01,3031-02,3031-09,351001,3611-02,3611-03,3719-01,413102,4131-03,4132-01,4132-02,521001,5211-02,7189-04,7189-09,861109,8619-02,8619-03,8619-04,861906,8619-07,8619-08
(1)
(5) Own (b) is negative,
but Unit(a) TFP is
positive, and differences
(a-b) is positive.
(b)
(a)
(a-b)
2211-01 Plastic Poducts 352101 Trucks and Buses 411101 Residential Const.(wooden)
4112-02 Residential Const.(nonwooden)
4121-01 Repair of
Construction 4131-01 Public
Const. of Road
851501Repair of Car 8516-01 Repari
of Machine
8611-04 Amusement and
recreation Facilities
(6) Both Own(b) &
Unit(a) TFP are positive,
and differences (a-b) is
positive.
(b)
1114-01
6211-01
6411-02
7122-01
(a)
(a-b)
Grain milling
Financial Service
Real Estate Rental
Bus Transp. Service
0111-01,0116-01,0116-02,0121-02,012104,0212-01,0311-00,0622-01,071101,1111-01,1112-02,1112-03,111304,1113-09,1115-03,1116-02,111901,1119-05,1121-01,1121-03,112901,1129-02,1611-02,1829-01,202903,2039-09,2072-02,2121-02,231101,2512-01,2519-09,2531-01,259901,2599-03,3011-02,3024-01,32120131-01,0131-02,1117-05,1119-03,112102,3421-03,3629-01,3711-09,391102,1519-09,1521-02,1522-09,1619-09,2319- 01,5212-02,6212-02,7142-01,7161-01
01,2319-09,2412-02,2522-01,2599-09,301201,3112-01,3241-01,3611-01,3621-01,371903,3911-02,3919-01,3919-03,3919-09,411201,7311-01,8900-00
6111-01 Wholesale Trade
7111-01 Railway Transport
8211-01 School
(Passengers) 1115-01,362101,5212-01,8213-03,8411-02
Education(Public)
861203 Eating and Drinking Places
0116for Pleasure
03,1119-09,1519-03,7121-02,718101,7189-02,7189-03,7189-06,731909,7321-03,8213-01,8221-01,822105,8313-01,8411-01,8514-01,851902,8619-01,8919-09
(2)
2061-01 Medicaments
3541-02 Internal Combustion
engines for Motor Vehciles and
Parts 6421-01 House Rent
8112-01 Public Adminm.(local)
8211-02 School Education
(Private) 8222-01 R&D (intraenterprises) 8519-03 Civil
Engineering and Construction
Service 0113-00,0115-02,012109,1113-02,1114-02,1117-03,112109,1514-01,2029-02,2521-01,335903,3611-01,5211-03,6411-01,711201,7121-01,7143-01,7171-01,718901,7189-05,8213-02,8221-06,831202,8313-02,8313-04,8519-04,8611-06
0211-01,8313-03
8511-01 Advertising
Saervices
9000-00
Activities not classified 3541-03 Parts of Motor Vehicles
1711-02
1116-01,1119-04,8519-01,8611-07
1131-02,1711-03,1813-02,1829-09,191101,2029-09,2599-04,2631-02,2812-01,289101,2899-02,2899-09,3111-01,3321-09,333201,3341-02,3411-02,3411-03,3421-02,362210,3629-09,3712-01,3719-02,4132-03,861102
3311-03 Electric Computing
Equipment(accessory equipt.)
1821-09,2631-01,2721-01,2722-03,3919-05
0112-01,1513-01,1812-02,2031-02,204109,2611-03,2649-09,2722-02,2811-01,332101,3421-04,5121-01
0114-01,1115-02,1117-01,1512-01,151202,1821-01.2611-01,2623-01,2711-03
2111-01 Petroleun Refinery
Producvts
262101 Hot Rolled Steel
3359-09 Other Electronic
Components
731201 Telecommunication
8111-01 Public Admim.(central)
8311-01Medical Service(Public)
8311-02 Medical Service(NGO)
8311-03 Medical
Service(Corporations) 851201 Information Services
(3)
2021-01
1117-02,1519-01
1112-01,2011-01,2079-01,2899-01,289903,3019-02,3541-01,3919-02,391906,8611-03
(4)
0629-09,1512-03,1529-01,1529-09,161101,2032-01,2033-01,2412-01,263103,3321-03,3331-01,3411-01,341109,3421-05,3919-04,5122-21
(5)
0115-01,0621-01
0721-01,1811-01
5111-00 Electricity 6212-01
Life Insurance 011509,0121-05,1117-04,1131-01,161103,2031-01,2041-01,2072-01,271102,2722-09,7141-01,7321-01,732102,8221-02,8312-01,8512-02,861101,8611-05
0111-02,0121-01,0611-01,1511-01,181201,2029-01,2032-02,2039-03,203904,2041-02,2041-03,2051-01,205102,2073-01,2121-01, 2611-02,261104,2622-01,2623-02,2649-01,271101,2711-09,2721-02,2722-01,272204,3023-01,3111-09,3211-01,321102,3211-03,3212-01,3311-01,331102,3321-02,3359-01,3421-01,342109,3622-01,3711-01,5111-04,715101,8213-04, 8221-03,8221-04,8619-05
(6)
Note: Rank of the Size in Domor Weight for Macro TFP Measures
(1) Rank 1-10
(2) Rank 11-20
(3) Rank 21-30
(4) Rank 31-40
(5) Rank 41-50
(6) Rank 51-
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million JPY
Capital formation in 2000 (Electronic computing equip.)
Annual own TFP growth ('95-'00)
Annual unit TFP growth ('95-'00)
3000000
2500000
2000000
1000000
500000
0
12.00%
10.00%
8.00%
6.00%
1500000
4.00%
2.00%
0.00%
-2.00%
Se
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ic i
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tr a n
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po
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to
El
million JPY
Capital formation in 2000 (Software)
Annual own TFP growth ('95-'00)
Annual unit TFP growth ('95-'00)
1400000
12.00%
1200000
10.00%
1000000
8.00%
800000
6.00%
600000
4.00%
400000
2.00%
200000
0.00%
0
-2.00%
Classification of Intangible Assets
defined by CHS
(1)Computerized information
1-1) Custom software
1-2) Packaged software
1-3) In-house software
1-4) Data base
(2)Innovative property
2-1) Science and engineering R&D
2-1) Mineral exploration
2-3) Copyright and license costs
2-4) Other product development design and
research expenses
(3) Economic Competencies
3-1) Brand equity
3-2) Firm-specific human capital
3-3) Organizational structure
Note: c.corrado, C.R.Hulten and D.E.Sichel, (2006) ,”Intangible
Capital and Economic Growth”, Working Paper 11948, NBER
Measurement of Software
Figure 1 Production Process and Use of Software
Originals
(1)
Reproduction of Original
(a) Own-account Original Software
(b) Purchased Original Software
Use in Reproduction
*Original as Investment
Use in Other Production
; Licenses to Use
*Copies as Investment
(c) Prepackaged Software
Embedded onto Other
Use in Other Production
*Original as Investment
Products
*Copies as Intermediate
Consumption
(d)Pre-installed Software
Use in Reproduction
Licenses to Reproduction
*Copies as Intermediate
Consumption
Note: (1) This figure is referred from Nomura(2004).
K. Nomura (2004) ,”Capitalizing Own Account Software in Japan”
Keio Economic Observatory, Discussion Paper
Software Measurement
in the Japanese IO and SNA
・IO framework: a) Customized software has been
measured since 1980 as a commodity of information
service industry. But it has not been capitalized. They
were treated to be allocated into intermediates and
consumption. b) Since 1995, customized software are
capitalized and since 2000, package software was added
into intangible assets.
・SNA framework: Since 1995 customized software,
Mineral exploration and plant engineering were
treated as intangible assets. Since 2000 package
software was added.
・Pre-installed software is treated as intermediate input.
・Own-account software has not been capitalized so far.
Capitalizing Own-accounts Software
In the Japanese IO and SNA, so far the own-account
software has not been treated explicitly not only as an
intermediate input, but also as an intangible asset.
We could understand the current treatment as the
following alternative explanations.
1) Hypothesis 1: Own-accounts software seems to be
included in the in-house R&D activities and allocated
as intermediate inputs.
R&D Hypothesis
2) Hypothesis 2: Own-accounts software seems to be
included in every industry activities implicitly.
Industry Activity Hypothesis
R&D Activity Hypothesis
R&D Activity Hypothesis:
・ Intra-enterprise R&D activities by industry
has been identified in IO and its outcome
including own-account software development is
assumed to allocate to industries as
intermediate inputs. Therefore in order to
capitalize own-accounts software, firstly, we
have to separate it from intra-enterprise R&D
activity and secondly capitalize it.
・GDP measure is increased by capital
formation, while GDI measure is increased by
imputed rents + capital consumption allowance
by own-account software as an intangible asset.
Industry Activity Hypothesis
Industry Activity Hypothesis:
・Own-accounts software activity assumes to be
included in the industry activity implicitly.
Then, own-accounts software activity has to be
identified from the industry activity.
・Because own-accounts activity has been already
included implicitly in the industry activity,
treatment we have to do is only to identify the
own-accounts software accounts from each
industry activity and capitalize it.
・GDP is increased by capital formation and GDI
is increased by capital consumption allowance.
Alternative Methods on the Evaluation of
R & D Activities by IO
・Current Treatment of the R&D Activities in the Japanese InputOutput Table
1) Classification
Research Institutes for National Science (Public)
Research Institutes for Cultural & Social Science (Public)
Research Institutes for Natural Sciences
(Private & non- profit)
Research Institutes for Cultural & Social Science
Private & non-profit)
Research Institutes for Natural Sciences (Profit making)
Research Institutes for Cultural & Social Sciences
(Profit making)
Research and Development (intra-enterprise)
Current Treatment of R&D in JIO
2. Gross Output evaluated by Cost structure
Gross Output = Total Intermediate Cost
+ Labor Compensation
+ Capital Consumption allowance
where gross output in R&D sectors except profit
making activities is evaluated by the total amount of
cost, and that in the profit making R&D institute is
added certain of profit to above cost.
The deflator of gross output of the R&D activities in
the institutes except the profit making institute is
estimated by the cost structure. That means that TFP
growth in R&D sector assumed to be zero by definition.
Current Treatments of R&D
in JIO
3. Outputs of the R&D activities, which are
estimated by the information of
expenditure side, are allocated into the
using sectors as the intermediate inputs,
but not into the final demand.
It implies that R&D activities do not
have any accumulation of the knowledge
stock in the society.
Alternative Treatments of R&D Activities
1.
2.
3.
R&D activities assume to accumulate the knowledge stock to
create new innovative action in the society. Some parts of the
knowledge are freely distributed and the other are distributed
with some charge. Whatever freely or non-freely available, we
have to evaluate R&D activities by the cost.
The R&D activities will accumulate the knowledge stock in the
society. We have to evaluate the R&D activities not only in the
current transaction, but also in the capital investment for the
knowledge stock as intangible assets. We need information to
allocate the output into intermediate demands as well as final
demand by the using sectors.
The knowledge stocks which are accumulated by the R&D
activities is going to create new capital service dynamically. In
the using sectors, they will capitalize the innovative capital
service as capital input from the knowledge stock.
Treatment of Activities though Intangible Assets
1. Activities though investment for intangible assets are assumed
to create the knowledge stock dynamically though intangible assets
as well as the static changes in flow of intermediate transaction.
2. We have to estimate the knowledge stock as intangible assets by
sectors and capitalize the service input dynamically.
Static
Structure
Dynamic
Structure
Aij
Bij
Ii
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