Does Intangible Capital Affect Economic Growth?

CEPS Working Documents No. 335

37 Pages Posted: 8 Sep 2010

See all articles by Felix Roth

Felix Roth

University of Goettingen (Gottingen)

Anna‐Elisabeth Thum

Centre for European Policy Studies (CEPS); European University Institute

Date Written: September 3, 2010


Using new international comparable data on intangible capital investment by business within a panel analysis from 1995-2005 in an EU-15 country sample, this paper finds a positive and significant relationship between intangible capital investment by business and labour productivity growth. This relationship is cross-sectional in nature and proves to be robust to a range of alterations. Our empirical analysis confirms previous findings that the inclusion of business intangible capital investment into the asset boundary of the national accounting framework increases the rate of change of output per worker more rapidly. In addition, intangible capital is able to explain a significant portion of the unexplained international variance in labour productivity growth and when incorporating business intangibles, capital deepening becomes an even more significant source of growth. The relationship is slightly stronger in the time period 1995-2000 and seems to be driven by the coordinated countries within the EU-15.

Keywords: capital, investment, labour, productivity growth

Suggested Citation

Roth, Felix and Thum, Anna-Elisabeth, Does Intangible Capital Affect Economic Growth? (September 3, 2010). CEPS Working Documents No. 335. Available at SSRN:

Felix Roth (Contact Author)

University of Goettingen (Gottingen) ( email )

Wilhelmsplatz 1
Göttingen, 37073

Anna-Elisabeth Thum

Centre for European Policy Studies (CEPS) ( email )

1 Place du Congres
Brussels, 1000

European University Institute

Villa Schifanoia
133 via Bocaccio
Firenze (Florence), Tuscany 50014

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