Identifying the ingredients of economic growth What factors contribute towards sustainable economic growth? EU-funded researchers have identified several factors that are not typically included in measuring GDP, but are vital contributors nonetheless. Society © HelloRF Zcool, Shutterstock The EU-funded SPINTAN project looked at how economic growth is generated by considering what are known as intangibles. The project’s pioneering results have received a great deal of attention from both policy makers and academics; the aim now is to feed the findings into economic policies that benefit citizens through achieving jobs and growth. The importance of intangibles ‘Intangibles are things like informational assets such as software, public databases and open data, as well as cultural assets, public and private R&D, investments that contribute to increased added value such as trademarks, improved internal corporate organisation and labour force training,’ explains Matilde Mas, SPINTAN project coordinator and professor of economic analysis at the University of Valencia in Spain. ‘Of these, only software and R&D are already included in GDP; the remaining assets are what we call “Beyond GDP”.’ There is growing acceptance that these ‘intangible’ factors are crucial to a country’s economic performance, and that certain policies contribute to enhancing the role of intangibles in the economy. For example, strengthening the rule of law and defence of property rights improves a country’s reputation, whilst training up a labour force leads to greater efficiencies and makes a country an attractive long term proposition to employers. The objective of the SPINTAN project, which was completed in November 2016, was therefore to develop new metrics and methods for understanding how these intangibles positively impact national economies, with a view to helping policy makers make better informed economic decisions in the future. Understanding economic growth The project had three strands —measurement and conceptual issues; construction of a set of database around public intangibles; and analytical research on various aspects of that performance. ‘The overall research purpose of the project was to identify and measure public sector intangible investment and capital services and to evaluate its role as a driver of firm-industry-country economic growth,’ explains Mas. ‘We hoped that this will provide new insights into how innovation policy agendas can be pursued, and about the key role of that public sector knowledge plays in economic growth.’ In particular, the project focused on improving citizen welfare through two channels: enhancing efficiency and highlighting the risk of increasing inequalities. On the efficiency side, the project called attention to the positive contributions of intangible assets to economic growth, and highlighted the link between tangible and intangible capital as well as between market and non-market sectors. The project also identified the existence of spillovers coming from intangibles in both market and non-market sectors. ‘Our results clearly show the role played by intangibles especially those ‘Beyond GDP’ in advanced economies,’ says Mas. ‘We are now presenting the main results through high level presentations at the European Commission, the OECD and the Inter-American Development Bank, and through the media. We hope this will convince decision makers of their relevance.’ The potential of this project in supporting growth and jobs in Europe has just begun to be tapped. Mas is hopeful that further academic work will continue in order build on the project’s pioneering results. ‘For this reason a new consortium has been formed and a proposal has already been submitted to the H2020 programme,’ she says. ‘The intention is to expand on the analysis that we have already done and to include the results of two other EU-funded projects: EU KLEMS and WIOD in addition to SPINTAN and INTAN Invest, which already concentrate on intangibles.’ Keywords SPINTAN, GDP, economic growth, intangibles, software, public databases, open data, cultural assets, R&D
