Intangible assets (such as software, data, intellectual property or a firm’s brand) have been a key driver of growth in high productivity growth economies over the last two decades. Today’s post shows that while there has been a strong increase in firm investment in computer software in South Africa, the real value of intangible capital has been fairly flat since 2005. This is a concern because the capital stock is a key driver of productivity growth and therefore long-term per capita income. In the United States and other advanced economies, the share of intangible assets in the total capital stock has risen relative to physical assets (such as plants and equipment), boosting productivity growth. In South Africa, the share of intangible capital remains at the same level it was in 2005. This raises questions around not only around the measurement of intangible assets in South Africa but also around what might explain why intangible investment is not growing as fast as in major economies.
