Intangible capital and growth in the ‘new economy’: Implications of a multi-sector endogenous growth model

Supriyo De

Structural Change and Economic Dynamics, 2014, vol. 28, issue C, 25-42

Abstract: The high-technology, knowledge-based ‘new economy’ has contributed greatly to economic growth in recent years. The ‘new economy’ is underpinned by intangible capital and specialised business services. However, despite prevalent empirical evidence, theoretical appreciations of this structural change are sparse. This paper addresses the lacuna by examining the impact of intangible capital on economic growth. It extends the Uzawa–Lucas framework by incorporating a specific production sector for intangible capital and endogenises the human capital effort devoted to intangible capital production. The model provides a novel approach to the analysis of the ‘new economy’ and the impact of business services on growth. The model reveals that expansion of the intangible capital sector may enhance growth by drawing human capital from the other sectors. This possibility is especially relevant for countries where physical capital is relatively scarce. This has significant policy implications for developed as well as emerging economies.

Keywords: Endogenous growth; Human capital; Intangible capital; New economy (search for similar items in EconPapers)
JEL-codes: O33 O41 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:28:y:2014:i:c:p:25-42

DOI: 10.1016/j.strueco.2013.11.003

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