1. U.S. Growth and Productivity using new National Accounts with Intellectual Property Dale Jorgenson, Mun Ho, Jon Samuels ** Harvard University, and ** BEA Asia KLEMS Workshop Tokyo, October 17 2014 The views expressed in this paper are solely those of the authors and are not necessarily those of the Bureau of Economic Analysis, U.S. Department of Commerce. 1

2. Agenda -Revision to US National Accounts -IT and R&D at the industry level -63-year Economic History,1947-2010 The Sources of Growth -Divide into 3 sub-periods: -1947-73 Post-war Recovery -1973-95 The Long Slump -1995-2012 Growth and Recession 2

3. Revisions to U.S. National Accounts 2013 R&D as Investment Entertainment & oth artistic originals as Investment Transfer costs of houses as Investment Pension plans and wages on accrual basis 3

4. 2007New a/cRevision GDP14480452 Consumption9744-28 Investment2644349 Nonresid structures497-28 Equipment88618 Intellectual Prop538294 Software244 R & D223 Artistic originals70 Resid structures68960 Inventories355 Net exports-7103 Government2802128 Revision to U.S. National Accounts 2013 4

5. Revision to growth rates 1973-951995-2012 Revised accounts GDP2.86%2.47% Investment3.03%2.66% Previous accounts GDP2.79%2.37% Investment2.93%2.49% 5

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12. IT and R&D use at the industry level 12

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15. Growth Accounting Summary PPF over industry value added Aggregate TFP from PPF: Aggreg TFP = Domar sum of industry tfp and reallocations: 15

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18. Industry Contributions to Aggregate TFP Growth, 1995-2012 Domar Weight TFP Growth Contrib to Agg TFP Computer0.0387.1560.296 Wholesale0.0751.4730.111 Retail Trade0.0861.0910.098 Securities & inv.0.0291.9400.046 Broadcasting, telecom0.0470.9460.046 Publishing (inc software)0.0231.4880.032 Computer systems0.0181.7360.031 Farms0.0230.7110.018 Utilities0.0290.6170.011 Restaurants0.0350.0590.002 Information, data proc0.008-0.536-0.001 S&L Gen Government0.128-0.012-0.002 Hospitals0.049-0.511-0.023 Chemicals0.048-0.517-0.026 Banks0.053-0.567-0.029 Other services0.040-0.736-0.031 Rental0.019-2.665-0.049 Petroleum0.031-0.336-0.052 Construction0.088-1.120-0.108 Total1.8070.506 18

19. Contributions of Individual Industries to Productivity Growth, 1947-2012 19

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22. SOURCES OF U.S. ECONOMIC GROWTH Contribution of Capital Input IT and Non-IT Capital Contribution of Labor Input College educated and Non-college Contribution of Productivity Replication vs. Innovation 22

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25. ContributionsRevised w IPPOld version Value Added2.752.65 IT-Producing Industries0.33 IT-Using Industries1.761.70 Non-IT Industries0.660.62 Capital Input1.541.31 IT Capital0.470.46 Non-IT Capital1.070.85 R&D Capital0.15 Labor Input0.981.05 College Labor0.660.70 Non-college Labor0.320.35 Aggregate TFP0.220.28 Growth accounting with and without Intellectual Property Capital, 1973-95 25

26. - Including R&D and Artistic Originals in capital input raised Capital input and GDP growth slightly, and reduce role of TFP slightly - Historically, input growth in the major source of growth, capital contributed 1.6% out of 3.0%. R&D only 0.18% - TFP contribution was highest during the Jobless Growth 2000-05 period of low investment and low growth - Effect of Financial Crisis. * IT-Production productivity relatively unchanged. * Big fall in productivity of non-IT group leading to zero aggregate TFP. SUMMARY 26

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28. The Evolution of Labor Input. More Information Technology and more Educated workers 28

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33. Highlighting the role of Information Technology Divide industries into 3 groups: 1)IT producing 2)IT-intensive using 3)non-IT intensive using IT-intensity index is the ratio of IT capital input plus IT intermediates to total capital input plus IT intermediates: 33

34. Classification of Industries (IT Intensity 2005) 34

35. Classification of Industries (IT Intensity 2005) 35

36. Classification of Industries (IT Intensity 2005) 36

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38. Industry Contributions to Value Added Growth; 1947- 2010 38

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