Unveiling intangible investment in Europe
Intangible investments, such as investment in know-how, reputation, organisation and training, are crucial for advancing Europe's knowledge-driven economy and competitiveness. However, there has not been much research on this relatively new field or a serious attempt to estimate these investments' real size and impacts. The EU-funded project 'Competitiveness, innovation and intangible investment in Europe' (Coinvest) aimed to highlight how these investments affect innovation, growth and productivity in Europe. The project brought together European experts and researchers to understand such 'hidden' investments, which are generally not integrated in gross domestic product (GDP) and mostly neglected in financial or economic reports. The researchers examined data from the market economy and industry, and then drafted guidelines for harmonising related definitions of such investments and data use across the EU. Importantly, the project team estimated intangible assets by country and cross-compared them, revealing large investments in different intangibles and an increasing trend in this direction. From this the project team calculated how intangibles affected output and productivity, specifically the impact of intangible expenditures on total factor productivity (TFP). It also used novel statistical software to establish relative productivity calculations, starting with pilot analyses for the United Kingdom and the United States. After a series of high-level meetings with stakeholders, Coinvest disseminated its results to interested parties such as the European Commission and the Bureau of Economic Analysis in the United States. Furthermore, the Organisation for Economic Co-operation and Development (OECD) adopted the project's findings and methods for its innovation strategy. These findings were highlighted in world-class articles and have already begun to influence policymaking, yielding a much more effective and accurate picture on how intangible investments shape the European economy.
