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Suggested Citation:"Front Matter." National Research Council. 2009. Intangible Assets: Measuring and Enhancing Their Contribution to Corporate Value and Economic Growth. Washington, DC: The National Academies Press. doi: 10.17226/12745.
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INTANGIBLE ASSETS

Measuring and Enhancing Their Contribution to Corporate Value and Economic Growth

Board on Science, Technology, and Economic Policy Policy and Global Affairs

Committee on National Statistics

Division of Behavioral and Social Sciences and Education

Christopher Mackie, Rapporteur

NATIONAL RESEARCH COUNCIL OF THE NATIONAL ACADEMIES

THE NATIONAL ACADEMIES PRESS

Washington, D.C.
www.nap.edu

Suggested Citation:"Front Matter." National Research Council. 2009. Intangible Assets: Measuring and Enhancing Their Contribution to Corporate Value and Economic Growth. Washington, DC: The National Academies Press. doi: 10.17226/12745.
×

THE NATIONAL ACADEMIES PRESS

500 Fifth Street, N.W. Washington, DC 20001

NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance.

Support of the work of the Committee on National Statistics is provided by a consortium of federal agencies through a grant from the National Science Foundation (award number SES-0453930). Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the organizations or agencies that provided support for the project.

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The National Academies are grateful to the Bureau of Economic Analysis of the U.S. Department of Commerce and the Science Resources Statistics Division of the National Science Foundation for their support of this activity.

Suggested citation: National Research Council. (2009). Intangible Assets: Measuring and Enhancing Their Contribution to Corporate Value and Economic Growth: Summary of a Workshop. Board on Science, Technology, and Economic Policy, Policy and Global Affairs, and Committee on National Statistics, Division of Behavioral and Social Sciences and Education. Christopher Mackie, Rapporteur. Washington, DC: The National Academies Press.

Suggested Citation:"Front Matter." National Research Council. 2009. Intangible Assets: Measuring and Enhancing Their Contribution to Corporate Value and Economic Growth. Washington, DC: The National Academies Press. doi: 10.17226/12745.
×

THE NATIONAL ACADEMIES

Advisers to the Nation on Science, Engineering, and Medicine


The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences.


The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering.


The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine.


The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council.


www.national-academies.org

Suggested Citation:"Front Matter." National Research Council. 2009. Intangible Assets: Measuring and Enhancing Their Contribution to Corporate Value and Economic Growth. Washington, DC: The National Academies Press. doi: 10.17226/12745.
×

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Suggested Citation:"Front Matter." National Research Council. 2009. Intangible Assets: Measuring and Enhancing Their Contribution to Corporate Value and Economic Growth. Washington, DC: The National Academies Press. doi: 10.17226/12745.
×

COMMITTEE FOR A CONFERENCE ON INTANGIBLE INVESTMENTS

KENNETH S. FLAMM (Chair),

Lyndon B. Johnson School of Public Affairs, University of Texas at Austin

CAROL A. CORRADO,

Conference Board, New York

MARTIN FLEMING,

IBM Corporation, Armonk, NY

KENAN JARBOE,

Athena Alliance, Washington, DC

RICHARD MANNING,

Pfizer Inc., New York

F.M. SCHERER,

John F. Kennedy School of Government, Harvard University

KATHERINE SCHIPPER,

Fuqua School of Business, Duke University

Suggested Citation:"Front Matter." National Research Council. 2009. Intangible Assets: Measuring and Enhancing Their Contribution to Corporate Value and Economic Growth. Washington, DC: The National Academies Press. doi: 10.17226/12745.
×

BOARD ON SCIENCE, TECHNOLOGY, AND ECONOMIC POLICY

EDWARD E. PENHOET (Chair),

Alta Partners, San Francisco

LEWIS W. COLEMAN,

DreamWorks Animation, Glendale, CA

KENNETH S. FLAMM,

Lyndon B. Johnson School of Public Affairs, University of Texas at Austin

RALPH E. GOMORY,

Stern School of Business, New York University, New York

MARY L. GOOD,

Donaghey College of Information Science and Systems Engineering, University of Arkansas at Little Rock

AMORY “AMO” HOUGHTON, JR.,

Former Member of Congress, Cohasset, MA

DAVID T. MORGENTHALER,

Morgenthaler Ventures, Cleveland, OH

JOSEPH P. NEWHOUSE,

Division of Health Policy Research and Education, Harvard University

ARATI PRABHAKAR, U.S.

Venture Partners, Menlo Park, CA

WILLIAM J. RADUCHEL,

Opera Software ASA, Great Falls, VA

JACK W. SCHULER,

Crabtree Partners, Chicago, IL

ALAN WM. WOLFF, Dewey & LeBoeuf, LLP,

Washington, DC

STEPHEN A. MERRILL, Executive Director

Suggested Citation:"Front Matter." National Research Council. 2009. Intangible Assets: Measuring and Enhancing Their Contribution to Corporate Value and Economic Growth. Washington, DC: The National Academies Press. doi: 10.17226/12745.
×

COMMITTEE ON NATIONAL STATISTICS

WILLIAM F. EDDY (Chair),

Department of Statistics, Carnegie Mellon University

KATHARINE G. ABRAHAM,

Department of Economics and Joint Program in Survey Methodology, University of Maryland

ALICIA CARRIQUIRY,

Department of Statistics, Iowa State University

WILLIAM DUMOUCHEL,

Phase Forward, Inc., Waltham, MA

JOHN C. HALTIWANGER,

Department of Economics, University of Maryland

V. JOSEPH HOTZ,

Department of Economics, Duke University

KAREN KAFADAR,

Department of Statistics, Indiana University, Bloomington

DOUGLAS S. MASSEY,

Department of Sociology, Princeton University

SALLY MORTON,

Statistics and Epidemiology, RTI International, Research Triangle Park, NC

JOSEPH NEWHOUSE,

Division of Health Policy Research and Education, Harvard University

SAMUEL H. PRESTON,

Population Studies Center, University of Pennsylvania

HAL STERN,

Department of Statistics, University of California, Irvine

ROGER TOURANGEAU,

Joint Program in Survey Methodology, University of Maryland, and Survey Research Center, University of Michigan

ALAN ZASLAVSKY,

Department of Health Care Policy, Harvard Medical School

CONSTANCE F. CITRO, Director

Page viii Cite
Suggested Citation:"Front Matter." National Research Council. 2009. Intangible Assets: Measuring and Enhancing Their Contribution to Corporate Value and Economic Growth. Washington, DC: The National Academies Press. doi: 10.17226/12745.
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Suggested Citation:"Front Matter." National Research Council. 2009. Intangible Assets: Measuring and Enhancing Their Contribution to Corporate Value and Economic Growth. Washington, DC: The National Academies Press. doi: 10.17226/12745.
×

Preface

In 2004, the U.S. Commerce Department’s Bureau of Economic Analysis (BEA), the agency responsible for the National Income and Product Accounts (NIPAs), began an effort to convert the NIPA treatment of research and development (R&D) expenditures from an annual business expense to an investment. The latter allows future returns, which contribute substantially to economic growth, to be considered. The first step, supported by the National Science Foundation, was to develop a Research and Development Satellite Account that would, with further refinements, eventually be incorporated into the NIPAs. With the completion of the first R&D satellite account in 2006, the lead BEA economist on the project, Sumiye Okubo, approached the National Academies’ Science, Technology, and Economic Policy (STEP) Board for assistance in organizing a workshop to evaluate the satellite account’s progress, and the National Academies agreed.

At roughly the same time, an influential study by Federal Reserve Board staff economists Carol Corrado and Daniel Sichel and University of Maryland economist Charles Hulten (CSH)1 estimated the nation’s investment in all intangibles (not limited just to scientific R&D) to exceed total investment in tangible assets (plant and equipment) and to account for a large share of economic growth. The CSH analysis included other categories such as expenditures on software, brand identification, employee training, and “nonscientific” R&D. The study was later closely replicated by analysts studying Japan and the United Kingdom, with similar findings.

1

Corrado, Hulten, and Sichel (2006a). Intangible Capital and Economic Growth. Working paper as part of the Finance and Economics Discussion Series, Divisions of Research and Statistics and Monetary Affairs, Federal Reserve Board, Washington, DC, April.

Suggested Citation:"Front Matter." National Research Council. 2009. Intangible Assets: Measuring and Enhancing Their Contribution to Corporate Value and Economic Growth. Washington, DC: The National Academies Press. doi: 10.17226/12745.
×

Briefed on the CSH study, Senator Jeff Bingaman (D-NM), chairman of the Senate Energy Committee and a member of the Senate Finance Committee, encouraged BEA and STEP to broaden the meeting’s agenda to address intangible investments beyond R&D. The STEP Board, in consultation with the National Academies’ Committee on National Statistics (CNSTAT), readily agreed.

A steering committee was formed to plan the workshop, composed of Carol Corrado, now with the Conference Board; Martin Fleming, IBM; Kenan Jarboe, Athena Alliance; Richard Manning, Pfizer; F.M. (Mike) Scherer, Kennedy School of Government, Harvard University; Katherine Schipper, Fuqua School of Business, Duke University; and myself as chair. Stephen Merrill, STEP executive director, assumed the lead staff role, in consultation with Connie Citro, CNSTAT director.

In addition to adopting a broad conception of intangible investments, the steering committee and staff adjusted the scope of the meeting agenda to include topics beyond measurement and accounting issues, which would promote discussion in several other directions:

  1. To compare the national studies of intangible assets to identify geographical differences in the composition and importance of intangible assets.

  2. To probe corporate views of and practices with respect to intangibles, especially the development of human capital.

  3. To examine and estimate the magnitude of the federal government’s intangible investments and how they can be better exploited.

  4. To draw on U.S. experience and multinational, national, regional initiatives elsewhere in the world to identify a range of public policy instruments that could promote private sector investment in, and better utilization of, intangible assets.

Once the workshop was scheduled, four of the steering committee members—Corrado, Flamm, Fleming, and Jarboe—assumed roles as speakers or moderators; three other members—Manning, Scherer, and Schipper—were unfortunately unable to attend. However, all were helpful in identifying participants, framing the questions, and attracting an international contingent of participants to the conference. We are grateful to them and to Stephen Merrill for assembling an outstanding program and an engaged audience. The cooperation of BEA staff and Jonathan Epstein of Senator Bingaman’s staff was indispensable; and we are also indebted to Chris Mackie of the CNSTAT staff for preparing this summary of the proceedings.

This workshop summary was reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the Report Review Committee of the National Research Council (NRC). The purpose of this independent review is to provide candid and critical comments that assist the institution in making its report as sound as

Page xiii Cite
Suggested Citation:"Front Matter." National Research Council. 2009. Intangible Assets: Measuring and Enhancing Their Contribution to Corporate Value and Economic Growth. Washington, DC: The National Academies Press. doi: 10.17226/12745.
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possible, and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process.

The panel thanks the following individuals for their review of this report: Martin Fleming, Corporate Strategy, IBM Corporation; Bronwyn H. Hall, Department of Economics, University of California, Berkeley; and E.J. Reedy, Entrepreneurship Division, Ewing Marion Kauffman Foundation.

Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations, nor did they see the final draft of the report before its release. The review of this report was overseen by Mark B. Myers, Senior Vice President for Corporate Research and Technology, Xerox Corporation (retired). Appointed by the NRC, he was responsible for making certain that the independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of the report rests entirely with the author and the NRC.

Kenneth S. Flamm, Chair

Committee for a Conference on Intangible Investments

Suggested Citation:"Front Matter." National Research Council. 2009. Intangible Assets: Measuring and Enhancing Their Contribution to Corporate Value and Economic Growth. Washington, DC: The National Academies Press. doi: 10.17226/12745.
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Intangible assets--which include computer software, research and development (R&D), intellectual property, workforce training, and spending to raise the efficiency and brand identification of firms--comprise a subset of services, which, in turn, accounts for three-quarters of all economic activity. Increasingly, intangibles are a principal driver of the competitiveness of U.S.-based firms, economic growth, and opportunities for U.S. workers. Yet, despite these developments, many intangible assets are not reported by companies, and, in the national economic accounts, they are treated as expenses rather than investments.

On June 23, 2008, a workshop was held to examine measurement of intangibles and their role in the U.S. and global economies. The workshop, summarized in the present volume, included discussions of a range of policy-relevant topics, including: what intangibles are and how they work; the variety and scale of emerging markets in intangibles; and what the government's role should be in supporting markets and promoting investment in intangibles.

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