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14-06-2022 | Original Paper

The importance of intangible assets in regional economic growth: a growth accounting approach

Authors: Mercedes Gumbau-Albert, Joaquín Maudos

Published in: The Annals of Regional Science | Issue 2/2022

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Abstract

Spain is one of the few countries in the world that has information on investment in intangible assets with a regional breakdown, so providing evidence of its importance as a factor in regional growth is the main value added of this paper. Series of capital stock in intangible assets are constructed by regions, which incorporate not only those the national accounts consider as investments and are therefore included in gross value added (GVA), but also the intangible assets not included in GVA, which the recent literature understand to be an important source of economic growth. Using the growth accounting approach, the results show that intangible assets explain 14.3% of Spain’s GVA growth, of which 9.4 pp correspond to the assets included in GVA (software, R&D and intellectual property rights) and 4.9 pp account for the rest (expenditure on design, advertising, market research, firm-provided worker training and improvements to companies’ organizational structure). Notable differences are also seen across the country, with investment in intangibles explaining up to 20% of economic growth in some regions. The importance of the contribution from these intangible assets highlights the need for economic policy measures (including regional policies) that boost investment in intangible assets and improve conditions of access to financing.

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Footnotes
1
See Goodridge et al (2021) and (2013).
 
2
De la Fuente (2019) explores regional convergence in per capita income and analyzes the explanatory factors, focusing on demographics, employment rate and productivity. Another recent study is that of Echevarria and Filip (2020) which analyzes regional convergence for the 2000-18 period and provides a summary of the available evidence for the Spanish case.
 
3
Given that a homogeneous series of GVA at the regional level was first made available in 2000, the period analyzed in this paper is 2000–2016.
 
4
We used the Telefónica Foundation-Ivie (2015) depreciation rates.
 
5
Although a real interest rate of 4% is currently high, it is the one generally used, as recommended by the OECD. It is important to note that this is a long-term average rate that applies to investment series from many years ago. In addition, in order to ensure the comparability of intangible assets with tangible assets, it is necessary to use this 4% rate, since it is the same rate used by the BBVA Foundation and the Ivie in the estimation of the tangible capital stock series. It should also be noted that according to the OECD, the results are barely sensitive to the interest rate used, contrary to what happens with the capital depreciation rate.
 
6
See Mas and Quesada (2019).
 
7
Information for the autonomous cities of Ceuta and Melilla is not included in the analysis given their small size and institutional singularities as compared to the 17 autonomous communities.
 
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Metadata
Title
The importance of intangible assets in regional economic growth: a growth accounting approach
Authors
Mercedes Gumbau-Albert
Joaquín Maudos
Publication date
14-06-2022
Publisher
Springer Berlin Heidelberg
Published in
The Annals of Regional Science / Issue 2/2022
Print ISSN: 0570-1864
Electronic ISSN: 1432-0592
DOI
https://doi.org/10.1007/s00168-022-01138-6