Capital good

Business

Archaeology

Investment (military)

Physical capital

Politics

History

Growth accounting

Macroeconomics

Total factor productivity

Economy

Political science

Economics

Goods and services

Productivity

Human capital

Production (economics)

Monetary economics

Capital (architecture)

Market economy

Financial capital

The Journal of Economic Perspectives

The production of goods and services is central to understanding economies. The textbook description of a firm, typically in agriculture or manufacturing, focuses on its physical “tangible” capital (machines), labor (workers), and the state of “know-how. ” Yet real-world firms, such as Apple, Microsoft, and Google, have almost no physical capital. Instead, their main capital assets are “intangible”: software, data, design, reputation, supply-chain expertise, and R&amp;D. We discuss investment in these knowledge-based types of capital: How to measure it; how it affects macroeconomic data on investment, rates of return, and GDP; and how it relates to growth theory and practical growth accounting. We present estimates of productivity in the US and European economies in recent decades including intangibles and discuss why, despite relatively rapid growth in intangible capital and what seems to be a modern technological revolution, productivity growth has slowed since the global financial crisis.

Intangible Capital and Modern Economies