JAMES BESSEN, Boston University
More Machines or Better Machines
Bessen assesses how much of the rapid growth in labor productivity in nineteenth century cotton weaving arose from capital-labor substitution and how much from technical change. By using an engineering production function and detailed information on major inventions, he finds that labor-saving technical change accounts for almost all of the growth. However, much of the labor-saving bias arose not from inventions but from acquisition of new knowledge and skills by weavers. Moreover, this was endogenous, influenced by wages and prices. This provides a technology-based explanation for the persistent association between economic growth and capital deepening.
RACHEL SOLOVEICHIK, Bureau of Economic Analysis
Theatrical Movies As A Capital Asset
Soloveichik estimates that in 2002 studios spent $10.1 billion producing original theatrical movies. These movies were shown in theaters in 2003 and will be sold on DVD and broadcast on television for decades to come. Because of their long working life, the international guidelines for national accounts, System of National Accounts 1993, recommends that countries classify production of movies and other entertainment, literary, and artistic originals as an investment activity and then depreciate those movies over time. However, BEA does not capitalize this category of intangible assets at the present time. As a first step in considering the treatment of this category of intangibles as a fixed asset, she collected data on movie production and calculated what GDP statistics would be if theatrical movies were classifed as a capital asset. She found that: 1) theatrical movies have a useful lifespan of at least 80 years; and 2) the motion picture production industry has been growing rapidly since 1980. Real GDP growth averages 0.001 percent higher per year since 1980 when theatrical movies are treated as a capital asset. 3) Investment in the motion picture industry is quite volatile. For example, the data appear to show that movie production plummeted by 50 percent in the last half of 2001, and then recovered completely in 2002.
JAISON R. ABEL, Federal Reserve Bank of New York
TODD M. GABE, University of Maine
Human Capital and Economics Activity in Urban America
Abel and Gabe examine the relationship between human capital and economic activity in U.S. metropolitan areas, extending the existing literature in two important ways. First, they use new data on metropolitan-area GDP to measure economic activity. Their results show that a one-percentage point increase in the proportion of residents with a college degree is associated with a 2.3 percent increase in metropolitan area GDP per capita. Second, they develop new measures of human capital that reflect the types of knowledge within U.S. metropolitan areas. Knowledge related to the provision of producer services, and information technology, are particularly important determinants of economic vitality.
Dietmar Harhoff, University of Munich,
Patent Families, Equivalents, and Patent Value
Harhoff described a new comprehensive patent dataset (PATSTAT), made available by the European Patent Office, that contains patent data for over 60 countries and allows users to trace international filings derived from priority filings as well as continuation and divisionals. Harhoffs paper explains how the data can be used to identify patent families systematically. The international scope of patent protection and the within-jurisdiction linkages between different patent rights are increasingly important. Large international patent families may signal the applicants willingness to invest in international patent protection, and complex within-jurisdiction families may signal costly patenting strategies. Harhoff studies the development of patent family size over time. Increases in family size are particularly strong in electrical engineering and IT, and are mostly pursued by applicants from the United States, Japan, and Great Britain. In a multivariate analysis, Harhoff shows that the construction of complex national families appears to occur mostly for valuable patents with large international families, but that this approach is also employed for low-quality patent applications.
CAROL ROBBINS, Bureau of Economic Analysis
Measuring Payments for the Supply and Use of Intellectual Property
The market for the licensing of intellectual property and other intangibles is growing rapidly in the United States. At the same time there is increasing interest in the value of these intangible assets and their impact on economic growth, productivity, and competitiveness. Robbins describes the measurement challenges involved therein and presents preliminary estimates of receipts of royalties and license fees both in the aggregate and by industrial sector. These estimates can be used to better assess the macroeconomic impact of intangibles and to trace the flows and impacts across industries. She uses previously unpublished estimates of BEA International Services trade data for royalty and licensing fees by industry sector to improve the current output measures for domestic producers of intellectual property, estimating the share of royalty income earned by different types of intangible assets for 2002. These assets are: patents and trade secrets, copyrights, trademarks, and franchised business formats. The estimates show that U.S. receipts for the use of these intellectual property assets totaled approximately $92 billion dollars in 2002; this compares with rental and leasing receipts for automobiles, machinery, computers, and other equipment of $95.1 billion dollars in 2002.
AVI GOLDFARB, University of Toronto
Measuring Brand Value in Equilibrium Framework
CAROL CORRADO, The Conference Board
Report of the NSF/Conference Board Workshop on Innovation Data