As I wrote about earlier in the week, starting July 31 2013, the Bureau of Economic Analysis will change the way it “accounts for” intellectual property in its measurement of gross domestic product (GDP). The changes will place greater value on heretofore uncounted types of spending. This spending, previously classified as “intermediate inputs,” will now be counted as part of GDP as investment. In sum:
R&D expenditures by businesses, NPISH, and governments [will be] counted as fixed investment
The change, the BEA says, is structurally due to:
Changes in the economic environment…[and the] [g]rowing importance of intellectual property products in business, productivity
And the change, according to the BEA, will lead to greater private- and public-sector wealth.
GDP and GDI impacts:
Private business sector GDP increases by new R&D investment
Government and NPISH GDP increases by CFC on the stock of R&D capital
This blog will be used to report and comment on this change. The change potentially signals a significant institutional advancement of key logics within advanced capitalism, as well as suggest a reason for economic optimism in the US potential for sustained, value-driven growth.