Investing in knowledge assets: a novel approach for measuring national intellectual capital index in emerging economies

Abstract

PurposeThe aims of the current study were twofold: first, to rank the world’s emerging economies based on a novel National Intellectual Capital Index (NICI) and its components; and second, to examine the impact of NICI and its components on economic growth, measured in terms of real GDP per capita.Design/methodology/approachWe employed principal component analysis (PCA) to construct the novel NICI based on five key socio-economic indicators including (1) national human capital, (2) national structural capital, (3) national relational capital, (4) national informational capital and (5) national innovational capital. These indicators are publicly available for many countries. The index was generated by considering the most appropriate socio-economic indicators as precise measures of NIC from the Penn world table (version 10.0), the World Bank’s database of world governance and development indicators and the KOF globalization across the selected emerging economies.FindingsThe empirical findings revealed that national human capital is a significant driver of NIC, corresponding to higher economic growth. This is followed by national informational capital, national relational capital, national innovation capital and national structural capital. Furthermore, results indicate that the contribution of national structural capital is marginal compared to other critical strands of NIC.Practical implicationsNIC is generally considered the most valuable strategic resource for driving knowledge economies, especially in the Industry 5.0 revolution. Ranking emerging economies based on the NICI sheds light on the accumulated stock of NIC and how it contributes to and improves the economic growth of these economies. The stock of NIC is considered a critical success factor for measuring both current and future economic prosperity. Therefore, using the socio-economic indicators of KOFGI as accurate measures of NICI will assist policymakers in formulating and implementing relevant policies to enhance the accumulation of knowledge-based capital, which are critical components of NIC.Originality/valueTo the best of the authors' knowledge, this is the first study of its kind, both theoretically and empirically, to measure the National Intellectual Capital Index (NICI) using the most nascent socio-economic indicators of NIC. Moving forward, this study evaluates the impact of NICI and its components on economic growth, which is a relatively sparse area of research in the context of emerging knowledge economies.