Cross‐Country Income Differences Revisited: Accounting for the Role of Intangible Capital

23 Pages Posted: 24 Sep 2018

See all articles by Wen Chen

Wen Chen

University of Groningen - Faculty of Economics and Business

Date Written: September 2018

Abstract

This paper develops a new intangible investment database that is consistent and internationally comparable for a set of 60 economies over the period 1995–2011. I find that over time a growing share of total investment consists of intangible assets, rather than investment in tangible assets, like machinery and buildings. Across countries, the level of economic development of a country is positively associated with its investment intensity in intangibles. By including intangible capital as an additional production factor, this paper finds that we can account for substantially more of the variation in cross‐country income levels. Depending on the assumptions regarding the output elasticities of factor inputs, the observed differences in intangible capital can account for up to 16 percentage points of the cross‐country income variation.

Keywords: cross‐country income differences, development accounting, intangible capital

JEL Classification: E22, O10, O47, O57

Suggested Citation

Chen, Wen, Cross‐Country Income Differences Revisited: Accounting for the Role of Intangible Capital (September 2018). Review of Income and Wealth, Vol. 64, Issue 3, pp. 626-648, 2018. Available at SSRN: https://ssrn.com/abstract=3254463 or http://dx.doi.org/10.1111/roiw.12305

Wen Chen (Contact Author)

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands

Register to save articles to
your library

Register

Paper statistics

Downloads
0
Abstract Views
60
PlumX Metrics