The combined contribution of intangible capital and global value chain participation to productivity

Abstract

This paper studies the combined contribution to productivity of four types of intangibles (R&D, software and databases, design and economic competencies) and global value chain (GVC) participation. The analysis is conducted at industry level. GVC participation is analysed using network centrality measures calculated from the World Input-Output Database (WIOD), while intangible valuation is obtained from the Intan-Invest database. Our unbalanced panel consists of 14 countries and 16 industries observed for the period 2000-2014. The analysis is based on a two-stage procedure. First, a proxy for total factor productivity (TFP) is obtained by estimating a production function with labour and non-ICT capital as inputs. Secondly, estimated TFP is used to evaluate how several types of intangibles and GVC measures affect productivity. Moreover, we use interaction terms in order to estimate jointly the impact of the two factors and evaluate the role of intangibles in the transmission mechanism between GVC and productivity. Both GVCs and intangibles were found to be significant drivers of productivity. Moreover, we find a combined effect of the two variables, with intangibles that moderate the relation between GVC and productivity.