Intangible assets and the productivity slowdown

Over recent decades, advanced economies have been characterised by reduced rates of productivity. In this article, we advance the hypothesis that one of the potential causes of this trend might be the new knowledge capitalisation practices. Capitalisation of intangible assets is justified by the limited exhaustibility of knowledge, which implies its slow obsolescence, and hence, having the potential of being capitalised to reflect its prolonged period of contribution to productivity. However, the capitalisation of an increasing proportion of the assets that initially were accounted for as labour or intermediate inputs is having a direct effect on increasing capital and theoretical output and reducing total factor productivity (TFP). Our empirical analysis based on US-listed firms shows that the capitalisation of knowledge strongly reduces both the levels of TFP, and because of its fast increase in the last two decades, its rates of growth.