2011

Can Investment in Intangibles Explain the Swedish Productivity Boom in the 1990s?

Reprint No. 2011:40

Author(s): Harald EdquistYear: 2011 Title: Review of Income and Wealth Volume (No.): 57 (4) Pages: 658–682
Online article (restrictions may apply)


In the early 1990s the Swedish economy experienced a severe economic and financial crisis which resulted in a substantial GDP decrease. Even though the crisis was not a complete surprise for many economists, almost no one expected that the Swedish economy would be prospering with booming productivity growth only a few years later. Economists have presented three explanations for the fast recovery and productivity growth in 1995–2006: market reforms, crisis recovery, and the impact of ICT. This paper offers an alternative view, emphasizing instead firms’ substantial investment in intangible assets such as R&D, design, and advertising. Based on the growth accounting framework, intangible capital accounted for more than 30 percent of the labor productivity growth in the Swedish business sector from 1995 to 2006. Thus, Swedish TFP growth, one of the highest among OECD countries, is reduced substantially when investment in intangibles is included in the growth accounting analysis.


Reference:
Edquist, Harald (2011), "Can Investment in Intangibles Explain the Swedish Productivity Boom in the 1990s?". Review of Income and Wealth 57(4), 658–682.

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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