The researchers also had access to global data to assess knowledge-intensive services whose outputs to other industries are mainly intangible capital. This data was used to estimate the movement of intangible capital along global value chains.
– In the future, an increasing share of exports will come from knowledge-intensive services, so this is important to understand. In Finland, for example, knowledge-intensive services have grown by 6% per year since 2007. They are driving the growth in Finland, says Piekkola.
Europe is lagging behind the US in knowledge-intensive services. According to Piekkola, software, training and organisational capital in particular can play a crucial role in explaining and closing the productivity gap between the US and Europe.
Attention to the quality of intangible investments
The project used euro area data to analyse the development of total factor productivity and compared it with the development of intangible investments.
– My observation was that in many European countries, intangible investments have become significant and their marginal productivity is decreasing. Investment does not always add value if it is not accompanied by the development of new technologies. More and more attention must be paid to the quality of intangible investments, says Piekkola.
The Globalinto project has developed methods to measure the productivity impact of intangible capital. The productivity effect has two dimensions: on the one hand, the innovation-driven technological change generated by intangible investment and, on the other hand, the impact of intangible investment on the skills of workers. The latter is as important as the former in meeting the challenges of a rapidly changing competitive environment.
Technological change needs to be further subdivided according to the different types of intangible investment at its origin, i.e. R&D, organisational capital and ICT.
– We still know quite a little about the drivers of technological change, but the extensive Nordic data sets offer new opportunities for analysis, says Piekkola.
Globalinto project
The Globalinto project, which ended in April 2022, was one of three €3 million projects funded by the EU’s Horizon 2020 programme to analyse the alarming phenomenon of the declining productivity of firms in Europe since the early 2000s. The Globalinto project addressed the productivity puzzle by researching and developing new ways to measure intangible capital in firms. The project was led by the University of Vaasa. Other collaborators were the University of Aarhus, the University of Hamburg, the University of Ljubljana, the University of Paris-Sacley, the National Technical University of Athens (NTUA), the Institute for Innovation Research at the University of Manchester and the Research Department of Statistics Norway. The research results and methodology will be used for further projects in the Nordic countries and Europe at large.
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