Returns to intangible capital in global value chains

Abstract

This paper was approved by the Working Party of the Trade Committee in September 2020 and prepared for publication by the OECD Secretariat. This paper, as well as any data and any map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

Multinational enterprises and intangible capital

“…This paper complements previous OECD analysis on the role of intangible capital in global value chains (GVCs) (Alsamawi et al, 2020 [1]) and further develops the policy implications related to the role of intangible assets in value capture (Van Assche, 2020 [2]). In particular, it focuses on the way both parent and host countries benefit from the accumulation of intangible capital in multinational enterprises (MNEs) and investigates the policies that can facilitate the diffusion of knowledge in GVCs to increase these benefits and ensure that they are fairly shared across countries.…”

“…Moreover, MNEs may also raise domestic firms' awareness of the value of intangible assets. Competition between domestic suppliers to be part of the MNE network can encourage their R&D investments (Ruiz Durán, 2014 [90]). Attracting affiliates of MNEs in the host economy should therefore be part of attractiveness policies.…”

Imperatives for post COVID-19 recovery of Indonesia’s education, labor, and SME sectors

“…Thus, the education system should also support the development and accumulation of expertise that are vital for sustaining and augmenting various types of society basic knowledge corpus including anthropology, linguistics, sociology, history, archeology, philosophy, and pure physical sciences. Nonetheless, accelerating the development and deployment of digitalization across economic sectors, sections of society, and rural and urban areas should be the core and main thrust of the development strategy that will create an enabling supporting environment for strengthening and deepening the country's enhanced participation in global trade, facilitate the relocation of global firms to Indonesia, and foster research and development, and evolution of a regulatory that is conductive to innovations and intellectual property rights protection (Alsamawi et al, 2020;Furstenthal et al, 2021). Increasing government focus on the creative industries underlines one of the justifications for the emphasis if nothing else.…”

Trade, investment and intangibles

“…Others non-discriminatory barriers that limit competition can have unintended negative consequences on the performance of intangibles activities. For example, the regulation of data and algorithms may influence the competitiveness of a country's artificial intelligence sector (Agrawal, Gans and Goldfarb, 2019 [109]). The companion paper to this report (Alsamawi et al, 2020[9]) reveals that in OECD countries there is a negative association between regulatory barriers to trade in services and returns to intangibles in GVCs.…”