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 Microtechnology industry is hiring – positive developments of past years continue
09.04.2018 | IVAM Fachverband für Mikrotechnik

nachricht RWI/ISL-Container Throughput Index with minor decline on a high overall level
20.03.2018 | RWI – Leibniz-Institut für Wirtschaftsforschung

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: 'Nanochains' could increase battery capacity, cut charging time

How long the battery of your phone or computer lasts depends on how many lithium ions can be stored in the battery's negative electrode material. If the battery runs out of these ions, it can't generate an electrical current to run a device and ultimately fails.

Materials with a higher lithium ion storage capacity are either too heavy or the wrong shape to replace graphite, the electrode material currently used in...

Im Focus: Stevens team closes in on 'holy grail' of room temperature quantum computing chips

Photons interact on chip-based system with unprecedented efficiency

To process information, photons must interact. However, these tiny packets of light want nothing to do with each other, each passing by without altering the...

Im Focus: Happy hour for time-resolved crystallography

Researchers from the Department of Atomically Resolved Dynamics of the Max Planck Institute for the Structure and Dynamics of Matter (MPSD) at the Center for Free-Electron Laser Science in Hamburg, the University of Hamburg and the European Molecular Biology Laboratory (EMBL) outstation in the city have developed a new method to watch biomolecules at work. This method dramatically simplifies starting enzymatic reactions by mixing a cocktail of small amounts of liquids with protein crystals. Determination of the protein structures at different times after mixing can be assembled into a time-lapse sequence that shows the molecular foundations of biology.

The functions of biomolecules are determined by their motions and structural changes. Yet it is a formidable challenge to understand these dynamic motions.

Im Focus: Modular OLED light strips

At the International Symposium on Automotive Lighting 2019 (ISAL) in Darmstadt from September 23 to 25, 2019, the Fraunhofer Institute for Organic Electronics, Electron Beam and Plasma Technology FEP, a provider of research and development services in the field of organic electronics, will present OLED light strips of any length with additional functionalities for the first time at booth no. 37.

Almost everyone is familiar with light strips for interior design. LED strips are available by the metre in DIY stores around the corner and are just as often...

Im Focus: Tomorrow´s coolants of choice

Scientists assess the potential of magnetic-cooling materials

Later during this century, around 2060, a paradigm shift in global energy consumption is expected: we will spend more energy for cooling than for heating....

All Focus news of the innovation-report >>>

Anzeige

Anzeige

VideoLinks
Industry & Economy
Event News

Optical Technologies: International Symposium „Future Optics“ in Hannover

19.09.2019 | Event News

Society 5.0: putting humans at the heart of digitalisation

10.09.2019 | Event News

Interspeech 2019 conference: Alexa and Siri in Graz

04.09.2019 | Event News

 
Latest News

Quality control in immune communication: Chaperones detect immature signaling molecules in the immune system

20.09.2019 | Life Sciences

Moderately Common Plants Show Highest Relative Losses

20.09.2019 | Life Sciences

The Fluid Fingerprint of Hurricanes

20.09.2019 | Life Sciences

VideoLinks
Science & Research
Overview of more VideoLinks >>>