A comparative study of intangible investment in Egypt and South Africa
| DOI | https://doi.org/10.1108/JIC-11-2016-0114 |
| Pages | 487-497 |
| Published date | 14 May 2018 |
| Date | 14 May 2018 |
| Author | Wen Chen |
| Subject Matter | Information & knowledge management,Knowledge management,HR & organizational behaviour,Organizational structure/dynamics,Accounting & Finance,Accounting/accountancy,Behavioural accounting |
A comparative study of
intangible investment in Egypt
and South Africa
Wen Chen
University of Groningen, Groningen, The Netherlands
Abstract
Purpose –The purpose of this paper is to understand the recent developments and trends of intangible
investment in Egypt and South Africa.
Design/methodology/approach –This paper follows the framework pioneered by Corrado, Hulten and
Sichel (2005, 2009) and measures investments in scientific R&D, organizational capital, and brand equity
using the expenditure-based approach.
Findings –The main findings are that South Africa invests consistently and considerably more in intangible
assets than Egypt. Among the three intangible assets examined, namely, scientific R&D, organizational
capital, and brand equity, South Africa seems to invest more evenly across these assets, whereas intangible
investment in Egypt is predominantly driven by investment in brand equity and very little in R&D.
Originality/value –This is the first paper to formally examine intangible investment in African countries.
The ballpark estimate provided in this study is a useful step forward in understanding the trends of
intangible investment in Egypt and South Africa.
Keywords Africa, Comparative study, Intangible investment, Knowledge-based capital
Paper type Research paper
1. Introduction
Since the influential work of Corrado et al. (2005) which standardized and popularized the
measurement approach of investment in intangible assets, evidence is growing stronger that
investment in intangible capital, also known as knowledge-based capital (OECD, 2013), has
become increasingly more important over time. According to the estimates constructed by
Corrado and Hulten (2014), the share of intangible investment had already exceeded the
share of tangible investment in the USA by the early 1990s and reached over 14 percent of
gross domestic product (GDP) in 2010 (see Figure 1). This increasing importance of
intangible investment is not only specific to the USA or industrialized economies such as the
European Union (Corrado et al., 2012), studies that look at other parts of the world, such as
China (Hulten and Hao, 2012) and Brazil (Dutz et al., 2012), also show a similar pattern with
investment composition gradually shifting away from tangible to intangible assets.
By including intangible capital estimates in a growth accounting framework, the extant
literature also finds that intangible capital plays an important role in determining labor
productivity growth (e.g. Corrado et al., 2009; Fukao et al., 2009; Roth and Thum, 2013;
van Ark et al., 2009). This new finding suggests that the role of measured total factor
productivity (TFP) or “our measure of ignorance”as it was coined by Abramovitz (1956) is
reduced, while capital deepening (tangible and intangible combined) constitutes the
dominant source of growth.
Despite the growing interest and the rapidly expanding literature on intangibles, most
studies tend to focus on advanced or emerging economies. No study has yet looked at
intangible investment in Africa, a continent that experienced very fast or even miraculous
economic growth in the last decade (McMillan and Harttgen, 2014; Young, 2012)[1]. It is of
interest in itself to examine what has been the investment pattern or trend in intangible
assets in Africa? It could also be relevant to the query whether the “African Growth
Miracle”, dubbed by Young (2012), can be sustained in the long run as knowledge-based
Journal of Intellectual Capital
Vol. 19 No. 3, 2018
pp. 487-497
© Emerald PublishingLimited
1469-1930
DOI 10.1108/JIC-11-2016-0114
The current issue and full text archive of this journal is available on Emerald Insight at:
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487
A comparative
study of
intangible
investment
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