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Investment in Intangible Capital: An Enterprise Perspective *
Author(s) -
WEBSTER ELIZABETH,
JENSEN PAUL H.
Publication year - 2006
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.2006.00296.x
Subject(s) - incentive , production (economics) , economics , industrial organization , investment (military) , productivity , physical capital , capital (architecture) , business , stock (firearms) , quality (philosophy) , monetary economics , market economy , microeconomics , human capital , macroeconomics , mechanical engineering , history , archaeology , politics , political science , law , engineering , philosophy , epistemology
As the amount of tangible matter in the world is fixed, the growth and deployment of intangible capital in the production process must be the sole source of productivity growth and thus our ability to enhance the (material) quality of life. This survey paper takes stock of our knowledge about enterprise investment in intangible capital, most particularly, with respect to the current debate over its measurement, the types of market failure associated with its production and use, the mechanisms used to appropriate the returns it generates and the ways in which it is diffused throughout the economy. We argue that the most fruitful policy is to eliminate ‘known’ deadweight losses that have only small side‐effects on the incentive to create.