Way to measure Intangible capital for innovation-driven economic growth: Evidence from China

Abstract

Intangible capital stock is an important variable of current concern for all sectors, which is a new driving force of innovation-driven economic growth. However, there is still room for improvement in the estimation method of China’s intangible capital stock, and the analysis of the estimation results is not yet sufficient. For this purpose, this paper firstly re-estimates China’s intangible capital stock using the CHS classification framework, especially in the estimation methods of software capital and scientific R&D capital, and makes a lot of improvements. Then, this paper uses not only the growth model but also the mediating effect model to classify the intangible capital in the CHS framework into explanatory and mediating variables of economic growth, and proposes that the explanatory variables are what drive new driving force of China’s economic growth and the intangible capital stock estimated in this paper. Finally, this paper provides a detailed analysis of the changes, structure, and distribution of the explanatory variables. The results find that (1) software capital and scientific R&D capital are the new driving forces of China’s economic growth; (2) China’s national stock of current-valued intangible capital rose from 0.4 trillion yuan to 16.4 trillion yuan from 2001–2017, with software capital stock growing faster than scientific R&D capital stock; (3) Intangible capital stock is mainly distributed in a few regions such as Beijing, Guangdong, Jiangsu and Shanghai; (4) The structure of intangible capital in most regions is not reasonable, and there is a bias towards software capital or scientific R&D capital; (5) The rapid growth of intangible capital stock in Jiangsu and other regions is one of the reasons for their fast economic growth rate, while the slow growth of intangible capital stock in Heilongjiang and Liaoning has led to a decline in their economic growth rate.