Final Report Summary - COINVEST (Competitiveness, innovation and intangible investment in Europe)
The COINVEST project was a 30 month collaborative research project funded under the European Commission (EC)'s Seventh Framework Programme, Theme 9: Socio-economic sciences and humanities. It was coordinated by Imperial College Business School London, under the leadership of the principal investigator Professor Jonathan Haskel. All of the corresponding papers could be accessed via the project's website, at http://www.coinvest.org.uk/bin/view/CoInvest/CoinvestPub online and were categorised under work package (WP) number, deliverable number, title and aggregation level.
The project aimed to understand the contribution of intangible investments to innovation, competitiveness, growth and productivity in Europe. Researchers, experts in the new field of intangible investments in economics came together to examine whether Europe was performing very well in the knowledge economy. It was necessary to do this, because most intangible investments are 'hidden' in national accounts and micro data. In national accounts this is because they are treated as intermediate inputs and so do not show up as part of investment either in gross domestic product (GDP) or as creating an asset that might account for changes in GDP. Similarly, intangibles are often not reported in micro work or are so reported in only an occasional way across countries. Researchers in the United Kingdom, Belgium, Bulgaria, France, Germany, Portugal and Sweden came together to investigate both micro and macro, i.e. market economy and industry respectively, data in these countries.
Our lead investigator for Bulgaria died suddenly near the end of this project. We would therefore like to mourn his passing and thank co-investigators who took over from him.
WP1 was concerned with the scoping of the available data on intangible assets for our countries and other countries too. It was also tasked with developing guidelines for harmonisation of the data across countries with the aim of establishing consistent definitions and applying the data to all other member states and associated countries. So, for example, the meeting in May 2009 was at the Organisation for Economic Cooperation and Development (OCED) who also had an interest in this work. During the COINVEST policy maker briefing, held in Sofia on 13 July 2010, methods were shared with the Eastern European delegates on how to adopt the guidelines for future use.
WP2 was concerned with investment in intangible assets in the European Union (EU). We planned to develop estimates for the most recent year possible of investment in intangible assets by each country and to compare and contrast countries to see in what intangible assets areas they invested most. Each country in the consortium developed estimates for as long a time series as possible of investment in intangible assets by each country. The results could be seen in the papers under WP3, where we compared and contrasted countries to see in what intangible assets areas they invested most and how this had changed. The results suggested both a significant investment in intangibles and a significant increase in such investment over the period. In these deliverables, we also generated the time series to then fit into the growth accounting programme.
We used the data collected above to examine within country output and how the capitalisation of intangibles affected the calculation of output. We also used the data collected above to explain their contributions to within-country output and how the inclusion of intangibles affected the explanation of how country productivity grew. These results were compared and contrast across counties, United Kingdom, Belgium, Bulgaria, France, Germany, Portugal and Sweden. Additional results were also evaluated by the conference board Europe for Spain, Italy and Greece. This involved, as well as new data, a new programme to generate the estimates which we had created.
In WP5, we analysed cross-county productivity levels and the proximate reasons for their differences using the new output levels from the capitalisation of intangibles and the new input levels from the additional intangible asset input. A programme in the statistical software STATA was written to establish relative productivity calculations. Whilst the program could be applied to all countries, due to time and data availability we carried out the analysis only for the United States of America and the United Kingdom, to serve as pilot for future work.
The results of explorations of micro data could be seen in the project deliverables 12 and 13. We analysed the micro data within and across countries, depending on the sources in each country to shed light on a variety of assumptions underlying the macro work and to see if a similar exercise on the micro-data gave consistent answers with the macro data. In the reports, we tried to determine the impact of intangible expenditures on the total factor productivity (TFP), looked at accounting data to see if valuing intangibles helped account for the market and booked value gap and developed a systematic questionnaire to help form a quantitative assessment of what companies spent on intangible asset building.
We completed all eight promised meetings, and co-organised three other meetings with the COST project, including the 2010 CAED meeting in London, with 179 attendees over three days. The OECD adopted COINVEST data and methods for its innovation strategy. We also held meetings joint with OECD to ensure dissemination of the work and briefed the OECD, European Union, United Kingdom Department of Business Innovation and Skills, United Kingdom Office of National Statistics and United States of America Bureau of Economic Analysis.
COINVEST work was written up in a column in the Financial Times and Economist. Moreover, COINVEST work was directly quoted by David Willetts, Minister of State for Universities and Science, in a speech called 'Science, innovation and the economy', presented on 9 July 2010 at the Royal Institution, London. This showed directly that COINVEST work influenced policy. He said 'I was particularly interested to read the recent Imperial College discussion paper by Jonathan Haskel and Gavin Wallis, entitled "Public support for innovation, intangible investment and productivity growth in the United Kigdom market sector". It shows particularly strong spillover benefits from research and development (R&D) spend on research councils. It shows a positive return from other forms of R&D too, but the spillover benefits seem to be greatest from the research councils. This is interesting evidence that research council spend is doing the job it should be doing, i.e. generating wider benefits across the economy as a whole. These arguments about clusters, about absorptive capacity and the importance of basic research have already led me to a number of conclusions about the role of government in supporting science and innovation. I can't talk about levels of investment, that must await the CSR, but I do want to share my thinking on policy direction.' The speech is available at http://www.bis.gov.uk/news/speeches/david-willetts-science-innovation-and-the-economy online.
Further information on the project is provided via http://www.coinvest.org.uk online.
The project aimed to understand the contribution of intangible investments to innovation, competitiveness, growth and productivity in Europe. Researchers, experts in the new field of intangible investments in economics came together to examine whether Europe was performing very well in the knowledge economy. It was necessary to do this, because most intangible investments are 'hidden' in national accounts and micro data. In national accounts this is because they are treated as intermediate inputs and so do not show up as part of investment either in gross domestic product (GDP) or as creating an asset that might account for changes in GDP. Similarly, intangibles are often not reported in micro work or are so reported in only an occasional way across countries. Researchers in the United Kingdom, Belgium, Bulgaria, France, Germany, Portugal and Sweden came together to investigate both micro and macro, i.e. market economy and industry respectively, data in these countries.
Our lead investigator for Bulgaria died suddenly near the end of this project. We would therefore like to mourn his passing and thank co-investigators who took over from him.
WP1 was concerned with the scoping of the available data on intangible assets for our countries and other countries too. It was also tasked with developing guidelines for harmonisation of the data across countries with the aim of establishing consistent definitions and applying the data to all other member states and associated countries. So, for example, the meeting in May 2009 was at the Organisation for Economic Cooperation and Development (OCED) who also had an interest in this work. During the COINVEST policy maker briefing, held in Sofia on 13 July 2010, methods were shared with the Eastern European delegates on how to adopt the guidelines for future use.
WP2 was concerned with investment in intangible assets in the European Union (EU). We planned to develop estimates for the most recent year possible of investment in intangible assets by each country and to compare and contrast countries to see in what intangible assets areas they invested most. Each country in the consortium developed estimates for as long a time series as possible of investment in intangible assets by each country. The results could be seen in the papers under WP3, where we compared and contrasted countries to see in what intangible assets areas they invested most and how this had changed. The results suggested both a significant investment in intangibles and a significant increase in such investment over the period. In these deliverables, we also generated the time series to then fit into the growth accounting programme.
We used the data collected above to examine within country output and how the capitalisation of intangibles affected the calculation of output. We also used the data collected above to explain their contributions to within-country output and how the inclusion of intangibles affected the explanation of how country productivity grew. These results were compared and contrast across counties, United Kingdom, Belgium, Bulgaria, France, Germany, Portugal and Sweden. Additional results were also evaluated by the conference board Europe for Spain, Italy and Greece. This involved, as well as new data, a new programme to generate the estimates which we had created.
In WP5, we analysed cross-county productivity levels and the proximate reasons for their differences using the new output levels from the capitalisation of intangibles and the new input levels from the additional intangible asset input. A programme in the statistical software STATA was written to establish relative productivity calculations. Whilst the program could be applied to all countries, due to time and data availability we carried out the analysis only for the United States of America and the United Kingdom, to serve as pilot for future work.
The results of explorations of micro data could be seen in the project deliverables 12 and 13. We analysed the micro data within and across countries, depending on the sources in each country to shed light on a variety of assumptions underlying the macro work and to see if a similar exercise on the micro-data gave consistent answers with the macro data. In the reports, we tried to determine the impact of intangible expenditures on the total factor productivity (TFP), looked at accounting data to see if valuing intangibles helped account for the market and booked value gap and developed a systematic questionnaire to help form a quantitative assessment of what companies spent on intangible asset building.
We completed all eight promised meetings, and co-organised three other meetings with the COST project, including the 2010 CAED meeting in London, with 179 attendees over three days. The OECD adopted COINVEST data and methods for its innovation strategy. We also held meetings joint with OECD to ensure dissemination of the work and briefed the OECD, European Union, United Kingdom Department of Business Innovation and Skills, United Kingdom Office of National Statistics and United States of America Bureau of Economic Analysis.
COINVEST work was written up in a column in the Financial Times and Economist. Moreover, COINVEST work was directly quoted by David Willetts, Minister of State for Universities and Science, in a speech called 'Science, innovation and the economy', presented on 9 July 2010 at the Royal Institution, London. This showed directly that COINVEST work influenced policy. He said 'I was particularly interested to read the recent Imperial College discussion paper by Jonathan Haskel and Gavin Wallis, entitled "Public support for innovation, intangible investment and productivity growth in the United Kigdom market sector". It shows particularly strong spillover benefits from research and development (R&D) spend on research councils. It shows a positive return from other forms of R&D too, but the spillover benefits seem to be greatest from the research councils. This is interesting evidence that research council spend is doing the job it should be doing, i.e. generating wider benefits across the economy as a whole. These arguments about clusters, about absorptive capacity and the importance of basic research have already led me to a number of conclusions about the role of government in supporting science and innovation. I can't talk about levels of investment, that must await the CSR, but I do want to share my thinking on policy direction.' The speech is available at http://www.bis.gov.uk/news/speeches/david-willetts-science-innovation-and-the-economy online.
Further information on the project is provided via http://www.coinvest.org.uk online.
