In-house intangible capital; Firm-level evidence from UK manufacturing

This event is part of the Dept of Economics Internal Seminar Series.

Speaker: Dr Panagiotis Fouskas

Speaker biography

Panos joined the Department of Economics, at Birmingham University, in 2014. He holds a BSc degree in Economics with specialization in General Economic Theory and Policy from Aristotle University of Thessaloniki (AUTH), Greece, a MSc degree in Financial and Business Economics from University of Essex, Department of Economics, UK and a PhD in Economics from Swansea University, UK. Panos has completed his PhD under the supervision of Prof D. Blackaby  and Dr C. Robinson.

Abstract

Constructing a linked ARD-BERD firm level dataset for the period 1997-2007 we estimate the returns of intangible capital through a standard production function approach. We assume that apart from finalized goods, firms produce knowledge flows that are turned into intangible assets and which are used as additional inputs in the production function. Our findings show that returns from capitalized intangible flows are greater than those of the expensed flows. This result holds for the in-house R&D, purchased R&D and Advertising also. Comparing in-house R&D and purchased R&D, we find that returns from the first exceed those generated by the latter and the results are robust for all specification considered. Focusing on in-house R&D stock, we also find that its effect is at least equal to that of tangible capital verifying the hypothesis that intangible assets are the leading determinants of growth in the modern knowledge-intensive economy.