Published macroeconomic data traditionally exclude most intangible investment from measured GDP. This situation is beginning to change, but our estimates suggest that as much as $800 billion is still excluded from U.S. published data (as of 2003), and that this leads to the exclusion of more than $3 trillion of business intangible capital stock. To assess the importance of this omission, we add intangible capital to the standard sources-of-growth framework used by the BLS, and find that the inclusion of our list of intangible assets makes a significant difference in the observed patterns of U.S. economic growth. The rate of change of output per worker increases more rapidly when intangibles are counted as capital, and capital deepening becomes the unambiguously dominant source of growth in labor productivity. The role of multifactor productivity is correspondingly diminished, and labor's income share is found to have decreased significantly over the last 50 years.

Measuring innovation is a challenging task, both for researchers and for national statisticians, and it is increasingly important in light of the ongoing digital revolution. National accounts and many other economic statistics were designed before the emergence of the digital economy and the growth in importance of intangible capital. They do not yet fully capture the wide range of innovative activity that is observed in modern economies. This volume examines how to measure innovation, track its effects on economic activity and on prices, and understand how it has changed the structure of production processes, labor markets, and organizational form and operation in business. The contributors explore new approaches to and data sources for measurement, such as collecting data for a particular innovation as opposed to a firm and using trademarks for tracking innovation. They also consider the connections between university-based R&D and business start-ups and the potential impacts of innovation on income distribution. The research suggests strategies for expanding current measurement frameworks to better capture innovative activity, including developing more detailed tracking of global value chains to identify innovation across time and space and expanding the measurement of innovation's impacts on GDP in fields such as consumer content delivery and cloud computing.

As the accelerated technological advances of the past two decades continue to reshape the United States' economy, intangible assets and high-technology investments are taking larger roles. These developments have raised a number of concerns, such as: How do we measure intangible assets like organizational capital and research and development investment? Are we accurately appraising the contribution and depreciation of high-technology capital? The answers to these questions have broad implications for the assessment of the economy's growth over the long term, for the pace of technological advancement in the economy, and for estimates of the nation's wealth.
In" Measuring Capital in the New Economy," Carol Corrado, John Haltiwanger, Daniel Sichel, and a host of distinguished collaborators offer new approaches for measuring capital in an economy that is increasingly dominated by high-technology capital and intangible assets. As the contributors show, these resources affect the economy in ways that are controversial and notoriously difficult to appraise. The challenge in measuring intangibles and the need for transparency in business accounting create inevitable tensions. At the heart of many of the recent corporate scandals has been an uncertainty about the treatment of intangibles in business accounts. In this detailed and thorough analysis of the problem and its solutions, the contributors study the nature of this economic challenge and provide guidance as to what factors should be included in calculations of different types of capital for economists, policymakers, and the financial and accounting communities alike.