Intangible Capital and Growth: Essays on Labor Productivity, Monetary Economics, and Political Economy, Vol. 1 (Contributions to Economics)

For several decades now, advanced economies across the globe have been undergoing a process of rapid transformation towards becoming knowledge economies. It is now widely recognized that intangible capital has been a crucial element in the growth performance of these economies and their firms. The term serves as a useful device for capturing those dimensions of capital that are not tangible in nature but are nevertheless fundamentally important for growth. It encompasses investments in education (human capital) and in informal (social capital) and formal (rule of law) institutions by the public sector and households, as well as investments by businesses aimed at enhancing their knowledge base, such as software, innovative property, and economic competencies. Intangible Capital and Growth is the first of two open-access volumes presenting a selection of the author's essays on Labor Productivity, Monetary Economics, and Political Economy. This first volume brings togethereight of the author's essays, selected with the aim of providing an overview of his research to date on intangible capital and growth. Intangible Capital and Growth Preface About the Author Contents Chapter 1: The Productivity Puzzle: A Critical Assessment and an Outlook on the COVID-19 Crisis 1 Introduction 2 Determinants of Labor Productivity Growth 3 Labor Productivity Growth, 1950-2006 4 The Productivity Puzzle, 2007-2015 5 Intangible Capital and the Productivity Puzzle 6 An Outlook on the COVID-19 Crisis and Labor Productivity Growth 7 Conclusion References Chapter 2: Revisiting Intangible Capital and Labor Productivity Growth, 2000-2015: Accounting for the Crisis and Economic Reco... 1 Introduction 2 Theoretical Linkages between Intangible Capital and Labor Productivity Growth 3 Estimates on Intangible Capital 4 Previous Empirical Results 5 Model Specification, Research Design and Data 5.1 Model Specification 5.2 Research Design 5.3 Data Sources 5.4 A Note on the Construction of Intangible Capital Stocks 5.5 A Note on the Construction of Intangible and Tangible Capital Services 6 Descriptive Analysis 7 Econometric Estimation 8 Conclusions Appendix 1 Construction of Intangible and Tangible Capital Services Growth Appendix 2 Descriptive Statistics Appendix 3 A Comparison of INNODRIVE and INTAN-Invest datasets References Chapter 3: The Rule of Law and Labor Productivity Growth by Businesses: Evidence for the EU, 1998-2005 1 Introduction 2 The Rule of Law and Labor Productivity Growth by Businesses: Theoretical Links in an EU Context 2.1 Direct Influence of the Rule of Law on Labor Productivity Growth by Businesses 2.2 Indirect Influence of the Rule of Law on Labor Productivity Growth by Businesses 3 Model Specifications, Research Design, Operationalization, and Data 3.1 Model Specifications 3.1.1 A Model for the Direct Contribution of the Rule of Law to Labor Productivity Growth 3.1.2 The Indirect Contribution of the Rule of Law to Labor Productivity Growth 3.2 Research Design 3.3 Operationalization and Measurement of the Data 4 Empirical Description of the Rule of Law within the EU 5 Econometric Results 5.1 Econometric Results between the Rule of Law and Labor Productivity Growth 5.2 Determinants of Intangible and Tangible Business Capital Investment 6 Empirical Conclusion, Discussion, and Policy Conclusion 6.1 Empirical Conclusion 6.2 Discussion of the Results Considering the Underlying Theoretical Literature 6.3 Policy Conclusions Appendices Appendix 1 Operationalization of the Rule of Law Appendix 2 An External Instrument for Measuring the Rule of Law in the Context of Development Economics Appendix 3 Selected Statistics References Chapter 4: Organizational Trust, Fear of Job Loss, and TFP Growth: A Sectoral Analysis for the EU 1 Introduction 2 Theoretical Links 2.1 Organizational Capital and Economic Performance 2.2 Organizational Trust and Economic Performance 2.3 Fear of Job Loss and Economic Performance 3 Model Specification, Research Design, and Data 3.1 Model Specification 3.2 Research Design 3.3 Data 4 Descriptive Statistics 5 Econometric Analysis 5.1 Sensitivity of Results 5.2 How Do these Results Fit in with Other Existing Empirical Results? 5.3 Objective Forces Driving Job Insecurity at the Individual Level 6 Conclusion Appendix References Chapter 5: Intangible Capital and Labor Productivity Growth: Panel Evidence for the EU from 1998-2005 1 Introduction 2 Theoretical Links between Business Intangible Capital and Labor Productivity Growth 2.1 Theoretical Relationship between Intangible Capital and Labor Productivity Growth 2.2 The Treatment of Intangible Expenditures 3 Estimates of Intangible Capital Investment 4 Previous Empirical Results 5 Model Specification, Research Design, and Data 5.1 Model Specification 5.2 Research Design 5.3 Data 5.4 A Note on the Construction of Intangible Capital Stocks 5.5 A Note on the Construction of Intangible and Tangible Capital Services 6 Descriptive Analysis 7 Econometric Analysis 7.1 Sensitivity Analysis 8 Conclusion Appendices Appendix 1 Descriptive Statistics Appendix 2 Construction of Intangible and Tangible Capital Services References Chapter 6: Measuring Innovation: Intangible Capital Investment in the EU 1 Innovation and EU 2020: Is R&D the Sole Factor for Measuring Innovativeness? 2 How Does R&D Investment by Businesses Compare to Investment in Intangibles in the EU? 3 Comparison between Tangible and Intangible Capital Investment in the EU 4 Conclusion References Chapter 7: Does Too Much Trust Hamper Economic Growth? Introduction 1 Theoretical Links Between Social Capital, Trust, and Economic Growth 1.1 Social Capital and Trust 1.2 Relationship Between Social Capital, Trust, and Economic Growth 2 Previous Findings 3 Data and Measurement 3.1 Operationalization 3.2 Model Specification 3.3 Measurement of Data 4 Descriptive Statistics 5 Econometric Analysis 5.1 Cross-Sectional Analysis 5.2 Pooled Panel Analysis 5.3 Panel Analysis 5.3.1 Sensitivity Analysis 6 Conclusion Appendix References Chapter 8: Social Capital, Trust, and Economic Growth 1 Introduction 2 Extension of the Neoclassical Model Assumption 3 Criticism of the Concept of Social Capital or Why Is There Capital in Social Capital? 4 The State of the Art and Definition of Social Capital 4.1 Coleman ́s Definition of Social Capital 4.2 Putnam ́s Definition of Social Capital 5 Interpersonal Trust 6 Positive Correlation between Social Capital, Trust, and Growth 7 Negative Relationship Between Social Capital, Trust, and Growth 7.1 Mancur Olson 7.2 Mistrust, Fear, and Economic Growth 8 Operationalization of Social Capital 9 Social Capital, Trust, and Economic Growth: Empirical Findings 10 Concluding Remarks References For several decades now, advanced economies across the globe have been undergoing a process of rapid transformation towards becoming knowledge economies. It is now widely recognized that intangible capital has been a crucial element in the growth performance of these economies and their firms. In the author's view, "intangible capital" serves as the most appropriate umbrella term for capturing several dimensions of capital that are not tangible in nature but are nevertheless fundamentally important for growth. The term encompasses investments in education (human capital) and in informal (social capital) and formal (rule of law) institutions by the public sector and households, as well as investments by businesses aimed at enhancing their knowledge base, such as software, innovative property, and economic competencies. Intangible Capital and Growth is the first of two open access volumes presenting a selection of the author's essays on Labor Productivity, Monetary Economics, and the Political Economy, which represent the first part of his habilitation in economics. This first volume brings together eight of the author's essays, selected to provide an overview of the evolution of his research on intangible capital and growth.