Tuesday, August 6, 2013

GDIP

Intangibles have become ever more tangible to economies.  In fact, invention, innovation, creativity, and research, and the patents, copyrights, trademarks, trade secrets, and know how whose official rationales are to promote and protect them are already major forces driving economic growth.  The United States Bureau of Economic Analysis ("BEA") formally recognized the importance of intangibles in its July 31, 2013, revision of how it calculates the gross domestic product ("GDP").  In a press release, the BEA describes several ways in which intangibles will henceforth be valued more highly:
* Expenditures by business, government, and nonprofit institutions serving households (NPISH) for research and development (R&D) are recognized as fixed investment. The new treatment improves BEA’s measures of fixed investment and allows users to better measure the effects of innovation and intangible assets on the economy.
* Similarly, expenditures by private enterprises for the creation of entertainment, literary, and artistic originals are recognized as fixed investment, further expanding BEA’s measures of intangible assets.
* In the NIPA fixed investment tables, a new category of investment, "intellectual property products," consists of research and development; entertainment, literary, and artistic originals; and software.
The BEA also notes that weighting intangibles more heavily in its new metric leads to upward revisions in both current and past GDP calculations.  To adapt Dire Straits (and Sting) ever so slightly, that's as close as governments can get these days to "Money for nothin' and growth for free."

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