Bernanke on Intangible Capital

Just catching up from the New Building Blocks for Jobs and Economic
Growth
conference in DC. I posted pretty actively on Twitter (or as Bernanke called it Tweeter) during the public sessions
and then helped lead one of the four key working sessions (more on that in my
next post).

We were thrilled to have Ben Bernanke as the keynote to open the conference. The core of his speech was about the importance of government support in research, a safe but important topic when talking about intangibles.

But more important to me were the comments he used to introduce and summarize his remarks. Here’s how he explained the growing importance of intangibles:

The topics you will address today and tomorrow, bearing on innovation and intangible capital, are central to understanding how we can best promote robust economic growth in the long run…recent research has highlighted the important role played by intangible capital, such as the knowledge embodied in the workforce, business plans and practices, and brand names. This research suggests that technological progress and the accumulation of intangible capital have together accounted for well over half of the increase in output per hour in the United States during the past several decades.

Innovation has not only led to new products and more-efficient production methods, but it has also induced dramatic changes in how businesses are organized and managed, highlighting the connections between new ideas and methods and the organizational structure needed to implement them.

In his closing he added:

We should also keep in mind that funding R&D activity is only part of what the government can do to foster innovation. As I noted, ensuring a sufficient supply of individuals with science and engineering skills is important for promoting innovation, and this need raises questions about education policy as well as immigration policy. Other key policy issues include the definition and enforcement of intellectual property rights and the setting of technical standards. Finally, as someone who spends a lot of time monitoring the economy, let me put in a plug for more work on finding better ways to measure innovation, R&D activity, and intangible capital. We will be more likely to promote innovative activity if we are able to measure it more  effectively and document its role in economic growth.

I added the bold type on the last statement. It’s simple and direct. It’s the essence of the value proposition for all of us in the intangibles field. We are more likely to successfully promote performance, innovation and growth if we can measure and document the role of intangibles. Read the speech. See the speech. To measure the effectiveness of your own organization’s intangibles, check out our IC Value Drivers assessment.

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