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[ 1 ]
Intangible Assets and Economic Growth.
Contribution to a Regional Database
Matilde Mas & Javier Quesada (Dirs.) E. Uriel, J. Fernández,
C. Albert, E. Benages, L. Hernández, C. Mínguez, J.C. Robledo
Award-winning project of the Cotec Foundation for Innovation’s 2016 PIA Program
BBVA Foundation-Ivie International Workshops
MEASURES TO ENHANCE PRODUCTIVITY GROWTH. NEW DEVELOPMENTS
Faculty of Economics
University of Valencia
October 30th, 2017
[ 2 ]
In the 17 Spanish regions productivity growth was slower
during the expansion (2000-2005) than in the following
years.
Reasons: Foro de Economía y Empresa. November 8th,
12:30-14:00
Annual growth rate of productivity per hour worked. Spanish regions.
2000-2005, 2005-2010 and 2010-2015 (percentage)
Source: INE and own elaboration.
-3
-2
-1
0
1
2
3
2000-2005 2005-2010 2010-2015
[ 3 ]
Knowledge economy and intangibles
The New Information and Communication Technologies (ICT):
Have transformed the production process of many existing
economic sectors as they promote robotisation and automation.
Have led to the creation of new sectors and new ways of doing
things.
Are one of the reasons behind the phenomenon of globalization.
And the fragmentation of production processes in different phases
(global value chains).
These changes are generally known as Knowledge Economy.
[ 4 ]
Knowledge economy and intangibles
The new ways to produce as a result of ICT ask for:
Changes (often drastic) in the organisational structure of firms.
Increase sophistication with the design of new products.
Create a brand image which sets it apart from simple commodities.
Win the loyalty of clients/customers.
Having skilled and on-the-job trained workers.
In other words, to invest in intangible assets.
[ 5 ]
Classification of intangible assets
Note: The colour indicates the group it belongs to (grey = IAGDP; blue = IABGDP).
Source: Corrado, Hulten and Sichel (2005, 2009) and own collaboration.
“Any use of resources that reduces current
consumption in order to increase it in the
future qualifies as an investment”
Corrado, Hulten y Sichel (2005, 2009).
The largest change is that spending on
intangibles has the same status as the
purchase of new machinery, equipment,
or the construction of factories, now
considered investment goods instead
of intermediate consumption.
Distinction between IAGDP and
IABGDP.
The inclusion of intangibles in the
National Accounts would raise
Spain’s GDP level by 3,5%.
1. Computerised information (software and databases)
2. Innovative property
2a. R&D
2b. Mineral exploration and entertainment and artistic originals
2c. Design and other new products/systems
3. Economic competencies
3a. Advertising
3b. Market research
3c. Firm-specific resources (employer-provided training)
3d. Organizational structure
3d.i. Acquired organizational structure
3d.ii. Own organizational structure
Total intangible assets included in GDP = IAGDP (1+2a+2b)
Total intangible assets “beyond GDP”B = IABGDP (2c+3)
Total intangible assets = IA = IAGDP + IABGDP (1+2+3)
What are intangibles assets?
[ 6 ]
Spain is a rather decentralized country, starting with the creation of the
Autonomous State with the 1978 Constitution. Thus, regional information is
fundamental for the design of economic policies.
Ivie has been providing information disaggregated by regions on tangible
capital (ICT and Non-ICT; human capital; social capital; and Inequality on a
regular basis.
This is the first study that offers information by regions on intangible capital in
an international context. Additionally, it includes a broad sectoral breakdown (27
sectors)
The database included in the study allows:
To position Spain and its region in relation to other EU countries and the
US.
To analize the differences/similarities in intangible endowments in Spain’s
autonomous communities as well as the convergence/divergence
among them.
To compare the impact of intangibles on national/regional productivity at
the same level as tangible capital, ICT and human capital already available.
The Intangibles Dataset
[ 7 ]
Tangible and intangible investment overextended GDP:
TAGDP, IAGDP and IABGDP. Private sector. Mean 1995-
2010 (percentage)
Source: INTAN-Invest, BBVA Foundation-Ivie, Cotec Foundation-Ivie, INE, Telefonica
Foundation, and own elaboration.
Spain is at the same level
as other advanced countries
in tangible assets.
However, it lags behind,
along with Italy, in
intangible assets.
The problem is the quantity,
not its composition
IUS investment in
intangibles surpasses that
of tangibles, while UK
investment in intangibles
and tangibles is practically
the same.
15,9
5,0
14,5
4,3
14,2
3,7
18,4
1,9
14,0
3,2
14
,1
2,0
16,7
6,6
12,9
4,0
10,1
5,8
5,2
7,1
5,7
4,7
7,3
3,9
6,8
8,4
8,0
0
2
4
6
8
10
12
14
16
18
20
Fin
land
Fra
nce
Germ
any
Ita
ly
Ne
therl
and
s
Spain
Sw
ede
n
UK
US
IAGDP IABGDPTAGDP
Sp
ain
Spain in an international context
[ 8 ]
Investment included in GDP and “beyond
GDP”: TAGDP, IAGDP and IABGDP, 1995-2014
(percentage)
Real investment: TAGDP, IAGDP and
IABGDP, 1995-2014
(1995 = 100)
The economic crisis has affected more severely investments in tangible
assets than in intangible.
0
10
20
30
40
50
60
70
80
90
100
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
Intangible assets beyond GDP (IABGDP)
Intangible assets included in GDP (IAGDP)
Non-residential tangible assets (TAGDP)
0
50
100
150
200
250
300
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
Non-residential tangible assets (TAGDP)
Intangible assets included in GDP (IAGDP)
Intangible assets beyond GDP (IABGDP)
The impact of the crisis
Source: BBVA Foundation-Ivie, Cotec Foundation-Ivie, INE and own elaboration.
[ 9 ]
Composition of investment in IAGDP by assets, 2010
(percentage)
The problem with IAGDP is
the quantity (less invested)
and not so much the
composition (the structure is
similar to that of other
countries).
34,3
51,8
27,8
46,8 56,3
49,1 45,7
59,6
34,2
61,2
41,5
65,0
45,5 36,6
42,0 52,0 30,5
44,8
4,5 6,7 7,2 7,7 7,1 9,0 2,4
9,9 21,0
0
10
20
30
40
50
60
70
80
90
100
Fin
land
Fra
nce
Germ
any
Ita
ly
Ne
therl
and
s
Spain
Sw
ede
n
UK
US
Software R&D Rest of assets
Sp
ain
Source: INTAN-Invest, BBVA Foundation-Ivie and own elaboration.
Composition of intangible assets. IAGDP
[ 10 ]
Composition of investment in IABGDP by assets, 2010
(percentage)
Source: INTAN-Invest, Cotec Foundation-Ivie, Telefónica Foundation and own elaboration.
However, regarding
IABGDP, the problem is
both with quantity and
composition.
Spain invests 50% in
advertising and design,
while the other countries
invest up to 50% only in
improving firms’
organizational structure.
22,3 23,3 20,8 24,6 15,7
25,9 27,3 16,8 12,1
16,7 8,8 13,1
11,4
8,3
24,2 10,2
8,9 20,1
3,4 5,7 4,3
12,2
10,6
5,8
3,3
4,7
3,9
15,4 20,2 25,7
18,9
18,6
17,4
15,3
19,0
21,6
42,3 42,0 36,0 32,9
46,8
26,7
43,9 50,6
42,3
0
10
20
30
40
50
60
70
80
90
100
Fin
land
Fra
nce
Germ
any
Ita
ly
Ne
therl
and
s
Spain
Sw
ede
n
UK
US
Design and new products Advertising Market research
Human capital Organisational structure
Sp
ain
Composition of intangible assets. IABGDP
[ 11 ]
Investment in intangible assets (IA) over
extended GDP. Spain’s autonomous
communities. 2013 (Spain = 100)
β-Convergence among Spain’s autonomous
communities. IA
Madrid is in the lead, followed by Catalonia and Navarre. More intensive
investment in intangible assets in the periphery.
Tendency to convergence among regions (those with less intangible
endowments in 1995 have experienced higher growth rates).
Andalusia
Aragón
Asturias
Balearic Islands
Canary Islands
Cantabria
Castile and Leon
Castile-La Mancha
Catalonia
Valencian Comm.
Extremadura
Galicia
C. of Madrid
R. of Murcia
Navarre
Basque Country
Rioja
Ceuta and Melilla
y = -0,3082x + 2,8327 R² = 0,206
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
0 2 4 6 8
Vari
ati
on
rate
IA
/ e
xte
nd
ed
GD
P (
%)
IA / extended GDP 1995 (%)
Inequality and β-convergence. IA
Source: BBVA Foundation-Ivie, Cotec Foundation-Ivie and INE.
[ 12 ]
Investment in IABGDP overextended
GDP. Spain’s autonomous communities.
2014 (Spain = 100, percentage)
β-convergence among Spain’s autonomous
communities. IABGDP
Madrid is in a prominent position. Greater gap between the “two Spains”
(less intensive ring in the centre).
Not very clear tendency to converge.
Andalusia
Aragón
Asturias
Balearic Islands
Canary Islands
Cantabria Castile and Leon
Castile-La Mancha
Catalonia
Valencian Comm.
Extremadura
Galicia
C. of Madrid R. of Murcia
Navarre
Basque Country
Rioja
Ceuta and Melilla
y = -0,3298x + 1,2564 R² = 0,0901
-1,5
-1,0
-0,5
0,0
0,5
1,0
1,5
2,0
2,5
0 1 2 3 4 5 6
Vari
ati
on
rate
IA
BG
DP
/ e
xte
nd
ed
GD
P (
%)
IABGDP / extended GDP 1995 (%)
Inequality and β-convergence. IAGDP
Source: BBVA Foundation-Ivie, Cotec Foundation-Ivie and INE.
[ 13 ]
Investment in IAGDP over extended GDP.
Spain’s autonomous communities. 2013
(Spain = 100, percentage)
β-Convergence among Spain’s autonomous
communities. IAGDP
Madrid stays in the lead. Fewer differences in IAGDP than in IABGDP.
The tendency to converge is more intense.
Andalusia
Aragón
Asturias
Balearic Islands
Canary Islands
Cantabria
Castile and Leon
Castile-La Mancha
Catalonia
Valencian Comm.
Extremadura
Galicia C. of Madrid
R. of Murcia
Navarre
Basque Country
Rioja
y = -1,3988x + 5,3416 R² = 0,3583
2,0
2,5
3,0
3,5
4,0
4,5
5,0
0 0,5 1 1,5 2 2,5
Vari
ati
on
rate
IA
GD
P /
exte
nd
ed
GD
P (
%)
IAGDP / extended GDP 1995 (%)
Inequality and β-convergence. IAGDP
Source: BBVA Foundation-Ivie, Cotec Foundation-Ivie and INE.
[ 14 ]
Andalusia
Aragón Asturias
Balearic Islands
Canary Islands
Cantabria
Castile and Leon
Castile-La Mancha
Catalonia
Valencian Comm.
Extremadura Galicia
C. of Madrid
R. of Murcia
Navarre Basque Country
Rioja
-3
-2
-1
0
1
2
3
-3 -2 -1 0 1 2 3
IA /
exte
nd
ed
GD
P 1
995 (
%)
Variation rate IA (1995-2013) (%)
II. Losing momentum I. Reinforced leader
III. Diverging IV. Converging
Andalusia Aragón
P. de Asturias
Balearic Islands
Canary Islands
Cantabria
Castile and Leon
Castile-La Mancha
Catalonia
Valencian Comm.
Extremadura Galicia
C. of Madrid
R. of Murcia
Navarre
Basque Country
Rioja
-2,0
-1,5
-1,0
-0,5
0,0
0,5
1,0
1,5
2,0
-2 -1 0 1 2
IAB
GD
P /
exte
nd
ed
GD
P 1
995 (
%)
Variation rate IABGDP (1995-2013) (%)
II. Losing momentum I. Reinforced leader
III. Diverging IV. Converging
b) IABGDP
Investment /extended GDP deviation (1995) and variation rate (mean 1995-2013) in relation
to the national average. Spain’s autonomous communities (percentage)
Taxonomy by regions according to their investment activity
Source: BBVA Foundation-Ivie, Cotec Foundation-Ivie and INE.
a) IA
[ 15 ]
Andalusia Aragón
Asturias Balearic Islands
Canary Islands
Cantabria Castile and
Leon Castile-La Mancha
Catalonia
Valencian Comm.
Extremadura Galicia
C. of Madrid
R. of Murcia
Navarre
Basque Country
Rioja
Ceuta and Melilla
-2,0
-1,5
-1,0
-0,5
0,0
0,5
1,0
1,5
2,0
-2,0 -1,0 0,0 1,0 2,0
IAG
DP
/ e
xte
nd
ed
GD
P 1
995 (
%)
Variation rate IAGDP (1995-2013) (%)
II. Losing momentum I. Reinforced leader
III. Diverging IV. Converging
c) IAGDP d) TA
Andalusia
Aragón
Asturias
Balearic Islands
Canary Islands
Cantabria
Castile and Leon
Castile-La Mancha
Catalonia Valencian Comm.
Extremadura
Galicia
C. of Madrid
R. of Murcia
Navarre
Basque Country
Rioja
-6
-4
-2
0
2
4
6
-2,0 -1,0 0,0 1,0 2,0
TA
/ e
xte
nd
ed
GD
P 1995 (
%)
Variation rate TA (1995-2013) (%)
II. Losing I. Reinforced leader
III. Diverging IV. Converging
Investment /extended GDP deviation (1995) and variation rate (mean 1995-2013) in relation
to the national average. Spain’s autonomous communities (percentage)
Taxonomy by regions according to their investment activity
Source: BBVA Foundation-Ivie, Cotec Foundation-Ivie and INE.
[ 16 ]
Classification of Spain’s autonomous communities according to their position in relation
to national average
Intangible assets:
Only Madrid displays leadership
Initial leadership by Catalonia and
Navarre stagnates
Converging autonomous communities:
Andalusia, Valencian Community,
Murcia and Ceuta & Melilla
Diverging autonomous communities:
Aragón, Asturias, Castile and Leon,
Extremadura, Basque Country and
La Rioja
Tangible assets:
More balanced distribution among
regions in the 4 categories
No clear leadership
IA IABGDP IAGDP TA
Andalusia converging converging converging diverging
Aragón diverging diverging diverging reinforced leader
Asturias diverging diverging diverging converging
Balearic Islands converging diverging converging reinforced leader
Canary Islands diverging diverging losing momentum losing momentum
Cantabria diverging losing momentum diverging losing momentum
Catalonia losing momentum losing momentum losing momentum losing momentum
Castile-La Mancha converging diverging converging converging
Castile and Leon diverging diverging diverging diverging
Valencian Community converging converging converging losing momentum
Extremadura diverging diverging diverging losing momentum
Galicia converging converging diverging losing momentum
Madrid reinforced leader reinforced leader reinforced leader converging
Murcia converging converging converging reinforced leader
Navarre losing momentum losing momentum losing momentum losing momentum
Basque Country diverging diverging diverging diverging
La Rioja diverging diverging diverging losing momentum
Ceuta and Melilla converging converging converging diverging
Taxonomy by regions according to their investment activity
Source: BBVA Foundation-Ivie, Cotec Foundation-Ivie, INE and own elaboration.
[ 17 ]
Growth accounting Spanish regions. 2000-2014 (percentage)
-2,0
-1,5
-1,0
-0,5
0,0
0,5
1,0
1,5
2,0
2,5
3,0
Hours worked Labour composition Non-ICT capital ICT capital Intangible capital TFP VA
The majority of regions have a TFP(efficiency) problem.
Labor and non-ICT capital main source of VA growth (transpiration growth
model).
Basque Country, Navarre and Aragon have opted for an inspiration growth model
based on ICT, intangibles and TFP.
Madrid is the region with the largest contribution of intangible assets.
Source: BBVA Foundation-Ivie, Cotec Foundation-Ivie, INE and own elaboration.
[ 18 ]
Tangible and intangible investment by sectors: TAGDP, IAGDP
and IABGDP. Average 1995-2014 (percentage) Sectoral differences in
intangible assets:
Highly intensive sectors:
Financial and insurance
activities, Transport
equipment, Machinery
and equipment n. e. c.
and Electrical and optical
equipment.
Less intensive sectors:
Agriculture, forestry and
fisheries, Transportation
and Public administration
and defense.
Very different weights of
investment in each of the
5 IABGDP components by
sectors.
Source: BBVA Foundation-Ivie, Cotec Foundation-Ivie, INE and own elaboration.
Intangible assets by sectors
[ 20 ]
A policy, either private or public, that aims to improve the efficiency of
the economic system as well as the welfare of its citizens needs
quantitative information to establish and follow up its goals.
The Cotec Foundation-Ivie database provides experts, institutions, the
government and firms with an immediate tool to diagnose and design
strategies to change, innovate and improve society’s living standards.
The wealth of information at regional and sectoral level that it contains is
internationally unique. This enables the detailed analysis of key issues
regarding growth strategies of regions and industries in Spain.
As said by the British Mathematician Lord Kelvin “what is not defined,
cannot be measured” and, along that line, according to P. Drucker “if you
can’t measure it, you can’t improve it”.
Certainly, the information provided will help narrow the gap that still
separates Spain from other developed countries regarding investment in
assets that play a crucial role in the long-term growth of economies.
Final comments
[ 21 ]
Intangible Assets and Economic Growth.
Contribution to a Regional Database
Matilde Mas & Javier Quesada (Dirs.) E. Uriel, J. Fernández, E. Benages, L. Hernández, J.C. Robledo
Award-winning project of the Cotec Foundation for Innovation’s 2016 PIA Program
BBVA Foundation-Ivie International Workshops
MEASURES TO ENHANCE PRODUCTIVITY GROWTH. NEW DEVELOPMENTS
Faculty of Economics
University of Valencia
October 30th, 2017
