Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

UK productivity stats fail to reflect investments in knowledge economy

07.12.2007
The way productivity performance is calculated in official statistics may be selling UK businesses seriously short, according to new research funded by the Economic and Social Research Council (ESRC).

The true impact of today’s ‘knowledge economy’ is hidden by out-dated forms of measurement, argues a study led by Professor Jonathan Haskel of Queen Mary, University of London, through an Advanced Institute of Management Research (AIM) Public Services Fellowship.

It is good news for Britain’s managers accused of failing when productivity falls. When the ‘intangible’ assets of modern business activity are factored in, productivity is shown to rise.

According to official statistics, the UK’s productivity performance declined after 1995, despite major investment in information and communication technology. And US productivity growth has accelerated recently, leaving the EU behind, particularly in retailing.

The study highlights that whilst investment in ‘knowledge’ type activities is increasingly important, innovations such as the use of iPods and the way software has revolutionised supply chains, customer analysis and staff organisation, have hardly affected UK economic performance indicators.

The project, supported also by HM Treasury and the Office for National Statistics, found that in 2004, business investment of £120 billion - or about 15 per cent of gross value added in the market sector of the economy – went on intangible assets such as software, research and development, design, training and branding. This sum equalled UK companies’ total investment in ‘tangible’ assets such as machinery.

When intangibles are brought into the equation, the level of nominal market sector gross value added in 2004 rises by about 13 per cent, and the share of nominal investment in GDP rises from 22 per cent in 1970 to 25 per cent in 2004, rather than remaining constant at about 16 per cent.

Researchers found that about half of intangible investment went on advertising and market research to support brands, training employees and boosting management expertise, and

32 per cent on design. The other 18 per cent was spent on computerised information.

Professor Haskel said: “When the British economy was based mainly on investments in tangible assets such as machinery, the methods used for calculating Gross Domestic Product (GDP) were broadly fit for purpose.

“But in an economy increasingly investing in intangibles, we could be missing some key aspects of economic activity”.

“We set out to research their contribution to productivity and its growth – and the results were striking. Our findings suggest that, in recent years, traditional measurement techniques may have considerably underestimated the importance of science, innovation and knowledge-based industries to the UK economy.”

Figures produced by Professor Haskel and his colleagues were referred to by Chancellor of the Exchequer Alastair Darling in his pre-Budget report in October, when he told MPs that “Britain’s future success will depend not just on investment in physical capital, but also skills, innovation and intellectual property.”

However, Mr. Darling was able to tell MPs that the new analysis showed that Britain could now be investing as much in intangible assets as the US, with almost £250 billion a year – up to a quarter of today’s income – going into the priorities essential for future prosperity.

Danielle Moore | alfa
Further information:
http://www.esrcsocietytoday.ac.uk

More articles from Business and Finance:

nachricht Europe's microtechnology industry is attuned to growth
10.03.2017 | IVAM Fachverband für Mikrotechnik

nachricht Preferential trade agreements enhance global trade at the expense of its resilience
17.02.2017 | International Institute for Applied Systems Analysis (IIASA)

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Giant Magnetic Fields in the Universe

Astronomers from Bonn and Tautenburg in Thuringia (Germany) used the 100-m radio telescope at Effelsberg to observe several galaxy clusters. At the edges of these large accumulations of dark matter, stellar systems (galaxies), hot gas, and charged particles, they found magnetic fields that are exceptionally ordered over distances of many million light years. This makes them the most extended magnetic fields in the universe known so far.

The results will be published on March 22 in the journal „Astronomy & Astrophysics“.

Galaxy clusters are the largest gravitationally bound structures in the universe. With a typical extent of about 10 million light years, i.e. 100 times the...

Im Focus: Tracing down linear ubiquitination

Researchers at the Goethe University Frankfurt, together with partners from the University of Tübingen in Germany and Queen Mary University as well as Francis Crick Institute from London (UK) have developed a novel technology to decipher the secret ubiquitin code.

Ubiquitin is a small protein that can be linked to other cellular proteins, thereby controlling and modulating their functions. The attachment occurs in many...

Im Focus: Perovskite edges can be tuned for optoelectronic performance

Layered 2D material improves efficiency for solar cells and LEDs

In the eternal search for next generation high-efficiency solar cells and LEDs, scientists at Los Alamos National Laboratory and their partners are creating...

Im Focus: Polymer-coated silicon nanosheets as alternative to graphene: A perfect team for nanoelectronics

Silicon nanosheets are thin, two-dimensional layers with exceptional optoelectronic properties very similar to those of graphene. Albeit, the nanosheets are less stable. Now researchers at the Technical University of Munich (TUM) have, for the first time ever, produced a composite material combining silicon nanosheets and a polymer that is both UV-resistant and easy to process. This brings the scientists a significant step closer to industrial applications like flexible displays and photosensors.

Silicon nanosheets are thin, two-dimensional layers with exceptional optoelectronic properties very similar to those of graphene. Albeit, the nanosheets are...

Im Focus: Researchers Imitate Molecular Crowding in Cells

Enzymes behave differently in a test tube compared with the molecular scrum of a living cell. Chemists from the University of Basel have now been able to simulate these confined natural conditions in artificial vesicles for the first time. As reported in the academic journal Small, the results are offering better insight into the development of nanoreactors and artificial organelles.

Enzymes behave differently in a test tube compared with the molecular scrum of a living cell. Chemists from the University of Basel have now been able to...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

International Land Use Symposium ILUS 2017: Call for Abstracts and Registration open

20.03.2017 | Event News

CONNECT 2017: International congress on connective tissue

14.03.2017 | Event News

ICTM Conference: Turbine Construction between Big Data and Additive Manufacturing

07.03.2017 | Event News

 
Latest News

Argon is not the 'dope' for metallic hydrogen

24.03.2017 | Materials Sciences

Astronomers find unexpected, dust-obscured star formation in distant galaxy

24.03.2017 | Physics and Astronomy

Gravitational wave kicks monster black hole out of galactic core

24.03.2017 | Physics and Astronomy

VideoLinks
B2B-VideoLinks
More VideoLinks >>>