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 How Strong Brands Translate into Money
15.11.2016 | Kühne Logistics University - Wissenschaftliche Hochschule für Logistik und Unternehmensführung

nachricht Demographic change depresses tax revenues
04.11.2016 | Fraunhofer-Institut für Angewandte Informationstechnik FIT

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: Novel silicon etching technique crafts 3-D gradient refractive index micro-optics

A multi-institutional research collaboration has created a novel approach for fabricating three-dimensional micro-optics through the shape-defined formation of porous silicon (PSi), with broad impacts in integrated optoelectronics, imaging, and photovoltaics.

Working with colleagues at Stanford and The Dow Chemical Company, researchers at the University of Illinois at Urbana-Champaign fabricated 3-D birefringent...

Im Focus: Quantum Particles Form Droplets

In experiments with magnetic atoms conducted at extremely low temperatures, scientists have demonstrated a unique phase of matter: The atoms form a new type of quantum liquid or quantum droplet state. These so called quantum droplets may preserve their form in absence of external confinement because of quantum effects. The joint team of experimental physicists from Innsbruck and theoretical physicists from Hannover report on their findings in the journal Physical Review X.

“Our Quantum droplets are in the gas phase but they still drop like a rock,” explains experimental physicist Francesca Ferlaino when talking about the...

Im Focus: MADMAX: Max Planck Institute for Physics takes up axion research

The Max Planck Institute for Physics (MPP) is opening up a new research field. A workshop from November 21 - 22, 2016 will mark the start of activities for an innovative axion experiment. Axions are still only purely hypothetical particles. Their detection could solve two fundamental problems in particle physics: What dark matter consists of and why it has not yet been possible to directly observe a CP violation for the strong interaction.

The “MADMAX” project is the MPP’s commitment to axion research. Axions are so far only a theoretical prediction and are difficult to detect: on the one hand,...

Im Focus: Molecules change shape when wet

Broadband rotational spectroscopy unravels structural reshaping of isolated molecules in the gas phase to accommodate water

In two recent publications in the Journal of Chemical Physics and in the Journal of Physical Chemistry Letters, researchers around Melanie Schnell from the Max...

Im Focus: Fraunhofer ISE Develops Highly Compact, High Frequency DC/DC Converter for Aviation

The efficiency of power electronic systems is not solely dependent on electrical efficiency but also on weight, for example, in mobile systems. When the weight of relevant components and devices in airplanes, for instance, is reduced, fuel savings can be achieved and correspondingly greenhouse gas emissions decreased. New materials and components based on gallium nitride (GaN) can help to reduce weight and increase the efficiency. With these new materials, power electronic switches can be operated at higher switching frequency, resulting in higher power density and lower material costs.

Researchers at the Fraunhofer Institute for Solar Energy Systems ISE together with partners have investigated how these materials can be used to make power...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

ICTM Conference 2017: Production technology for turbomachine manufacturing of the future

16.11.2016 | Event News

Innovation Day Laser Technology – Laser Additive Manufacturing

01.11.2016 | Event News

#IC2S2: When Social Science meets Computer Science - GESIS will host the IC2S2 conference 2017

14.10.2016 | Event News

 
Latest News

UTSA study describes new minimally invasive device to treat cancer and other illnesses

02.12.2016 | Medical Engineering

Plasma-zapping process could yield trans fat-free soybean oil product

02.12.2016 | Agricultural and Forestry Science

What do Netflix, Google and planetary systems have in common?

02.12.2016 | Physics and Astronomy

VideoLinks
B2B-VideoLinks
More VideoLinks >>>