Measuring intangible assets
outside of the SNA boundary
Fernando Galindo-Rueda
OECD - DSTI/EAS
Working Party of National Accounts Meeting
OECD, October 2011
Outline
1. OECD project on
“New Sources of Growth: Intangible
Assets” (NSG IA)
2. The measurement workstream for the
NSG IA project
– Issues and contributions
3. Next steps and questions
OECD Innovation Strategy
Measuring innovation
Investment in fixed and intangible assets as a share of GDP, 2006
%
Machinery and equipment
Software and databases
R&D and other intellectual property products
Brand equity, firm specific human capital, organisational capital
30
25
intangibles
20
15
10
5
United Kingdom
United States
Finland
Germany
Denmark
France
Sweden
Austria
Portugal (2005)
Canada (2005)
Spain
Australia
Japan (2005)
Czech Republic
Italy
Slovak Republic
0
Source: OECD (2010), Measuring Innovation: A New Perspective, OECD, Paris based on
COINVEST [www.coinvest.org.uk], national estimates by researchers, EU KLEMS database and
OECD, Annual National Accounts Database.
3
Contribution of IAs as proxy for impact of
innovation investment on growth.
Intangible assets account for a large share of Labour Productivity growth
Percentage contributions, 1995-2006 (or nearest available year)
%
Contribution from intangible capital
Contribution from tangible capital
7
6
5
4
3
2
1
0
Source: OECD, based on research papers.
Labour productivity growth
NSG: IA project
•
•
•
•
The OECD horizontal work on New Sources of Growth: Intangible
Assets (NSG: IA) mandated by the OECD Council and approved by the
Budget Committee. 2011-2012
Resources provided by the office of the OECD Secretary General (Central
Priority Fund).
General oversight role accepted by the Committee on Industry, Innovation
and Entrepreneurship (CIIE). Coordination by STI Directorate.
Various components:
–
–
–
–
–
•
Measurement. CSTAT
Global value chains. CIIE
Big data. ICCP
Knowledge networks and markets. CSTP.
Tax, corporate governance, competition…
CSTAT PWB: Measures of intangible assets -- contribution to horizontal
project on new sources of growth:
– a working paper on intangible assets and growth accounting (Q4 2011)
– empirical implementation for selected countries (Q4 2012)).
An expanding boundary
SNA1993
OECD TF
Intangible assets project
“Innovation
property”
Entertainment,
literary &
artistic
originals
Software &
databases
Research &
Experimental
Development
Innovation
K assets
other than R&D
“Economic
competences”
SNA1993
Marketing
and brand
assets
Mineral
exploration
and evaluation
SNA2008
Human
capital
Organisational
capital
SNA2008: Other intellectual property products?
Implementing a new paradigm?
• Recognise the produced and “longer-lived” nature
of knowledge, despite uncertainty and
immateriality
• Apply National Accounts disciplines and tools to
clarify nature and extent of investment in
innovation. Increase awareness of potential.
– Supply and demand for knowledge
– Transactions across sectors and countries
– Relevant economic aggregates – output/income
– gross/net
Concepts
• An asset is a store of value representing a benefit
accruing to the economic owner by holding or
using the entity over a period of time.
• IPPs key step towards reflecting the Knowledge
Economy
• IPPs/IAs definitions combine intangible assets:
– Content of the work/activity
– Objective of the activity
– Embodiment of the output
– Type of IP protection
Known measurement challenges
• Defining and valuing different types of IPPs
outside the boundary
• Measuring IPPs as inputs in the production of
other IPPs
• Apply rule of precedence?
• Originals and licenses to use
• Deflators, asset lives
• International dimension
 Reconcile what’s conceptually robust with what is
practically feasible and policy-relevant
Demonstrate potential of existing sources
• Use estimates of market output of relevant “knowledge”
sector.
• Comprehensive picture of earnings received by knowledge
workers by occ & industry
– E.g. scientists, engineers, architects, designers, …
• Use of SU-IO tables to build ratios of K cost of production
relative to earnings base. E.g. Archit & eng design, …
• Mapping out market and own account output, as well as
assumptions.
• Consider existing (sometimes commercial) sources of
market expenditures (e.g. marketing).
• Test feasibility of producing internationally comparable
macro and sector estimates.
Improving existing micro sources - NESTI
• “Frascati” R&D surveys. NESTI Task Force reviewing
design of surveys in order to:
– Adapt to changes in ways companies manage and
report R&D activities
– Improve ability to meet SNA capitalisation needs
• “Oslo” innovation surveys. NESTI project to:
– Review questions on expenditures on innovation
– Opportunity to identify clearer linkages between the
notion of intangibles investment and investment in
innovation.
ZEW Proposal for an Alternative Design
Category
Expenditure
in 2010
Please estimate the share
spent on innovation*
1.
In-house R&D
€ R&D ______
100
%
2.
Purchase of external R&D
€ R&D ______
100
%
3.
Additions to property,
plant & equipment1)
€ SBS _____
_____ %
4.
Additions to software1)
€ SBS______
_____ %
5.
Additions to concessions,
rights and licenses1)
€ __________
_____ %
6.
Employer funded training
(internal+external)
€ __________
_____ %
7.
Advertising, marketing campaigns,
market research (i+e)
€ __________
_____ %
8.
Costs of design activities (i+e)1)
€ __________
_____ %
9.
Costs of organisation / business
process improvement (i+e)
€ __________
_____ %
1) excluding expenditures for R&D
* to be defined: only technological or technological + non-technological (combined or
separately)
Developing new micro sources
• Recognise limited scope for new sources
• Feasibility of asking questions on broad
range of intangible investment
– UK. ONS and NESTA. 2nd survey in field
– Italy. ISTAT pilot survey in field
– Other countries considering pilot surveys or
piloting questions within their innovation
surveys
– Google discussion group set up
Measuring “Big Data” - WPIIS
“Big data” = large stock of information created by
mobile networks, remote sensors and cloud
computing – 3 proposals:
i) The value added of the “digital data” industries.
ISIC Rev 4. 6311 (data activities) 6312 (web portals) 5812 (publ
direct.) 5819 (other publ)
ii) “Digital data” on the Internet. Market value of
companies owning technology for collecting, processing
and diffusing digital data as proxy for its value.
iii) Advertising expenditures on the Internet.
Design and marketing as test cases
• Design assets. NESTI.
– Increasing importance by policy makers
– Overlaps with R&D and software
– Mix of fcn/aesthetics – tech and non tech
– Diverse communities of practice / methods
• Marketing / brand assets. WPIA
– Importance in company value – NPNFA in SNA
– Extreme form of rivalry – social vs private value
– Embodiment and dependencies (e.g. possible to sustain
brand value without quality improvement?)
Growth accounting
• State assumptions more explicitly: Factor
shares, CRS, knowledge rents. Limitations
• Test ability of broader intangibles view to reduce
the productivity growth unknowns.
– Address practical GA problems.
• Consider the implications for output and income
growth of a world with increasing number of
risky, fast depreciating, knowledge assets
Analysis -WPIA
• Link input-based measures with output based measures
– E.g. using measures of patent quality, etc…
• Test whether intangibles measures meet “asset
properties”.
– Econometric approaches to test flow of capital
services.
• Establish policy relevance parameters, e.g:
– Extent of knowledge spillovers versus businessstealing effects (e.g. for marketing expenditures).
Measurement deliverables
• Technical paper: Review the strengths and drawbacks of standard
methodologies for the definition and measurement of the flows and
stocks of key intangible assets and their link to innovation.
• Technical paper: Experience with firm-based measures of
intangible assets/innovation and guidelines
• Technical paper(s) on individual assets: big data, design, other
• Dataset on investment in intangible assets at the macro level
(drawing on existing estimates? business sector/Total Economy
sector? Extrapolate data beyond 2005-6).
• Dataset on investment in intangible assets at the sectoral level
• Dataset on IP portfolio of companies? (matched patents,
trademarks, ORBIS)
• Stand-alone publication with new metrics and measurement
agenda (making the case for improving measures of intangible
assets)
Next steps
•
•
•
•
Ongoing review of data sources
Conceptual development work
Focus on specific intangibles
Organisation of expert workshop
– Late January / early February
– Combine different communities of expertise
Questions
•
•
•
•
Perception of national user needs?
Priorities for the work?
Interest in contributing to conceptual work?
Feasibility of providing some detailed data
breakdowns from existing sources?
• Interest in contributing to the workshop?
Thanks
fernando.galindo-rueda@oecd.org
NESTIteam