The Impact of Intangible Assets on Regional Productivity Disparities in Great Britain

Abstract

During the past few years there has been a growing consensus in the literature that intangible assets represent a major source of productivity growth. Intangibles facilitate the accumulation of knowledge and information via learning and innovation, allowing, in this way, modern economies to improve the efficiency with which they utilise their resources. Nonetheless, despite the proliferation of studies that investigate the territorial impact of intangibles (variously defined), the full effect of these assets on regional productivity dynamics remains elusive. National Accounts still treat most of what can be considered intangibles as intermediate expenditure entailing that they are largely excluded from conventional measures of gross value added (GVA) and investment. The present paper attempts to tackle this shortcoming not only by including intangibles as capital in the aggregate production function, but also by employing GVA data that are adjusted for intangibles as output. The aim is to investigate the role of intangible assets on the evolution of regional productivity disparities in Great Britain during the period 1995-2004. The analysis considers the spatial effects of intangibles on both partial productivity measures and total factor productivity levels, while the regional figures are also scrutinised for the possible presence of (J-convergence and /3-convergence trends during this time.

Effect of regional skill gaps and skill shortages on firm productivity

“…They may even be counterbalanced by negative externalities of larger cities and core regions (Broersma and van Dijk, 2008; Harris et al., 2011). To understand the variation in regional productivity fully, scholars have underlined the increase in aggregate productivity and income in the presence of higher skill levels, pointing to the importance of human capital (Abel, Dey and Gabe, 2012; Marrocu and Paci, 2012; Melachroinos and Spence, 2014; Rosenthal and Strange, 2008) and the tendency of more skilled workers to live in densely populated areas (Di Giacinto et al., 2014; Glaeser and Resseger, 2010). Indeed, complementary national and firm-level evidence indicates low levels of skills negatively impact productivity and growth (Crafts and O’Mahoney, 2001; Machin, Vignoles and Galindo-Rueda, 2003; Webber, Boddy and Plumridge, 2007; Wixe, 2015), while regional level evidence has also shown that the positive relationship between productivity and the effect of agglomeration externalities is stronger in more skilled areas (Glaeser and Resseger, 2010; Harris and Moffat, 2015).…”

Diversity of Regional Labour Markets in Poland

“…Scholars link the heterogeneity of regional productivity with an uneven distribution of skills (Morris et al, 2019). The increase in aggregate productivity and income is connected with the presence of higher skill levels, pointing to the importance of human capital (Rosenthal and Strange, 2008;Marrocu and Paci, 2012;Abel et al, 2012;Melachroinos and Spence, 2014) and the tendency of more skilled workers to live in densely populated areas (Glaeser and Resseger, 2010;Di Giacinto et al, 2014;Noja and Cristea, 2018). Fernald and Wang (2016) add an explanation based on a softer response of employment to the cycle and to pro-cyclical factor utilization (physical capital, labour, and human capital).…”

Modelling intangibles at the regional level in Europe: what lessons from a multidimensional approach?

“…Intangible assets contribute to productivity and growth within the firm, for example,, through human capital, organisational abilities, R&D activities and brand equity, as well as have implications to a broader community and economy, such as through local externalities, innovation and entrepreneurship, institutional system, social capital and trust, among others (Suriñach & Moreno, 2012). Intangibles allow to utilise resources more efficiently through accumulation of knowledge and information via learning and innovation (Melachroinos & Spence, 2014).…”

“…Being different, regions are also closely connected to each other by knowledge flows and spillover effects (Suriñach & Moreno, 2012). Regional economic growth may be associated with high level of intangible capital, or territorial/relational proximity to it (Melachroinos & Spence, 2014). In this regard, a regional focus represents a fruitful and relevant perspective for unveiling territorial aspects of intangible assets, and regional characteristics become important considerations when analysing intangibles and explaining their economic implications.…”