Advanced economies have suffered from low economic growth since the global financial crisis in 2008, and attention is being paid increasingly to the accumulation of intangibles including human and knowledge capital as a new source of economic growth Economists also are focusing on intangibles as key assets that link information and communications technology (ICT) assets to productivity growth. In the October issue of the RIETI Report, we present Faculty Fellow Tsutomu Miyagawa's column "Intangibles and productivity growth: Evidence from Japan and Korea" co-written with Hyunbae Chun, Hak K. Pyo, and Konomi Tonogi, and originally posted on the VoxEU website.
Miyagawa et al. examine how intangibles contribute to economic growth in Japan and Korea, both of which suffer from low productivity in the service sector. Although the intangible investment ratio is increasing for both countries, the contribution rate of tangible assets is greater, which is different from what is observed in advanced western nations. Financial institutions prefer tangible assets to intangible assets because of the former's higher collateral values, and in order to promote productivity growth in the service sector through accumulation in intangibles, Japan and Korea must construct a financial market and accounting system where investors are able to evaluate intangibles explicitly.
Hak K. PYO Visiting Scholar, Korea Institute for International Economic Policy (KIEP)
TONOGI Konomi Assistant Professor in the Department of Economics / Department of Contemporary Business, Kanagawa University
Since the Global Crisis of 2008, advanced economies have suffered from low economic growth. Economists and policymakers are increasingly paying attention to the accumulation of intangibles as a new source of economic growth.
The OECD (2013) emphasised that the effects of intangibles on productivity growth are greater than those of tangibles. In Japan, the Shinzo Abe Cabinet is promoting productivity growth in the service industry. The role of intangibles such as human capital and knowledge capital are emphasised in several government reports, such as the White Paper on the Japanese Economy and Fiscal Policy and the White Paper on International Trade and Industry. These reports showed how intangible investment contributed to productivity growth in Japan.