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“Mark-ups and firm-level export status”

This result hinges, at least in part, on our assumption that the non-farm business output price is an appropriate deflator for scientific R&D. If we followed the R&D literature and used a deflator with a wage component, the result that scientific R&D played a relatively small role in accounting for recent U.S. economic growth would be, if anything, stronger. On the other hand, if the deflator for IT investment were used instead (as suggested by Mairesse and Kosoglu, 2005), we would find that scientific R&D played a more important role. TABLE 5 Contribution of Intangible Capital Deepening to the Annual Change in Labor Productivity, Non-Farm Business Sector (percentage points) 1973–95 1995–2003 Memo: Accel. (1) (2) (3) 1. Intangible capital deepening 0.43 0.84 0.41 2. Computerized information 0.12 0.27 0.15 3. Innovative property 0.13 0.22 0.09 3a. Scientific 0.05 0.08 0.03 3b. Non-scientific 0.08 0.14 0.06 4. Economic competencies 0.17 0.35 0.18 4a. Brand equity 0.04 0.08 0.04 4b. Firm-specific resources 0.13 0.27 0.14 Note: Components may not sum to totals because of independent rounding. Review of Income and Wealth, Series 55, Number 3, September 2009 © 2009 The Authors Journal compilation © International Association for Research in Income and Wealth 2009 681 accounts, another question is relevant: how much impact would the capitalization of the other intangibles have on published growth rates? Table 6 addresses this question by showing estimates for the non-farm business sector, including software but not the other intangibles, for periods shown in Tables 4 and 5. A comparison of the top-line result in Table 6 with the corresponding estimate on line 1 in the lower panel of Table 4 indicates that the growth rate of output per hour is not greatly increased by the inclusion of the other intangibles from 1995–2003 (2.95 percent versus 3.09 percent). However, the composition of the sources of growth is affected, with a significantly greater role for capital deepening with the full accounting for intangibles and a proportionately smaller role for MFP. Again, the capitalization of intangibles matters for the understanding of U.S. economic growth.