On 10 October 2013, the OECD presented its new report called "Supporting Investment in Knowledge Capital, Growth and Innovation" at a High-level working lunch on “Knowledge-Based Capital: A Blueprint for Advancing Innovation and the Digital Economy” in the context of the 2013 Innovation Summit hosted by the Lisbon Council and NESTA.

1. 1
Supporting Investment in Knowledge
Capital, Growth and Innovation
Andy Wyckoff – Lunch - Lisbon Council
10th October 2013

2. 2
To recap - knowledge-based capital (KBC)
Three main types of assets being examined
Computerised information
(software, databases)
Innovative property
(patents, copyrights, trademarks, designs)
Economic competencies
(brand equity, firm-specific human capital,
business networks, organisational know-how that
increases enterprise efficiency, etc.)

3. ...and growing in importance, not just in the
United States…
Australia, France, Japan: Investment in KBC, 1981-2010
(percentage of adjusted GDP)
0%
2%
4%
6%
8%
10%
12%
14%
16%
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
KBCinvestmentasapercentageofvalueadded
Australia France Japan

4. KBC relatively resilient during the crisis
(change by type of business investment, 2008-2010,
% points of value added)
4
Source: Source: OECD National Accounts Main Aggregates, INTAN-Invest, Eurostat and multiple national
sources.
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
Percentagepointchangeininvestmentintensity
KBC intensity Tangible intensity

5. And KBC is positively associated with
GDP per capita (2000-10)
5
Source: Source: OECD National Accounts Main Aggregates, INTAN-Invest, Eurostat and multiple national
sources.
Australia
Austria
Belgium
Denmark
Finland
France
Germany
Greece
IrelandItaly
Japan*
Netherlands
Portugal
Spain
Sweden
United Kingdom
United States
2%
4%
6%
8%
10%
12%
14%
10000 15000 20000 25000 30000 35000 40000 45000 50000
KBCInvestment(%ofvalueadded)
GDP per capita (PPP$)

6. Business investment in KBC and tangible assets 2010 (% market sector value added)
Source: OECD calculations based on INTAN-Invest, Eurostat and multiple national sources.
6
KBC accounts for near to or over half of all
business investment in several countries
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
Investmentintensity,percentageofvalueadded
Tangible capital Computerised information Innovative Property Economic Competencies

7. Business investment in KBC and tangible assets 2010 (% market sector value added)
Source: OECD calculations based on INTAN-Invest, Eurostat and multiple national sources.
7
KBC accounts for near to or over half of all
business investment in several countries
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
Investmentintensity,percentageofvalueadded
Tangible capital Computerised information Innovative Property Economic Competencies
But big differences exist across Europe…with
implications for innovation, advanced
manufacturing and tradable.

8. The European R&D record is also mixed
Source: OECD, Science, Technology and Industry Scoreboard (2013) – forthcoming.
USA
CHN
JPN
DEU
KOR
FRA
GBR
RUS
IND
BRA
CAN
ITA
AUS
ESP
SWE
NLD
CHE
TUR
AUT
BEL
FIN
MEX
DNK
POL
CZE
NOR
ZAF
PRT
IRL
HUN
GRC
NZL
SVN
CHL
SVK
IDN
ESTLUX
ISL
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5
Researchers, per
thousand employment
Gross domestic expenditures on
R&D as a percentage of GDP

9. No matter their size, young firms are the job
creators
Source: OECD, Dynemp Express – preliminary results.
Note: Unweighted average across years and 16 countries.
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Young (<5) Old (5+) Young (<5) Old (5+) Young (<5) Old (5+)
Percentageshareintotalemployment,total
jobdestructionandtotaljobcreation
Employment Job creation Job destruction

10. Big differences in access to risk capital
(VC investment, 2012, % GDP)
.
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
%
Early stage Later stage Breakdown not available
0.000
0.005
0.010
0.015
0.020
0.025
0.030
0.035
Magnified

11. Creating value from data is at the leading edge of
business innovation
World data storage (billions of gigabytes)
Source: OECD based on IDC Digital Universe research project.
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

12. Selected Policy Implications and Questions
Entrepreneurship and business development:
– Needs well-functioning systems of debt and early-stage equity
finance, efficient bankruptcy regimes, flexible labour markets and a
skilled labour force, non-punitive and stable tax settings.
What policies are working best in Europe?
Creating economic value from data:
– Optimal policy not clear. But more can be done in the fields of open data
access, ICT infrastructure and skills.
What are the key barriers to the creation of value from data in
Europe?

13. Selected Policy Implications and Questions
Intellectual Property Rights (IPR):
- Increasingly important framework condition. But aspects of IPR systems
have not kept up with technological change. Patent quality in decline.
Europe presents a fragmented picture on some aspects of IPR. Are
there any low-hanging fruits for policymakers ? What needs to be
done on design ?
Human capital:
- The foundation of KBC. But soon-to-be-published OECD indicators
suggest ‘brain drain’ among researchers from the EU to the US.
How can the countries and regions that need growth retain their
human capital?

14. http://oe.cd/kbc
Supporting Investment in Knowledge
Capital, Growth and Innovation