Supporting Investment in Knowledge Capital, Growth and Innovation
Knowledge-based capital (KBC) results from business investment in non-physical assets such as R&D, data, software, patents, new business models, organizational processes, firm-specific skills and designs. This publication brings together the results of a two-year programme of work at the OECD on New Sources of Growth and the role of Knowledge-based Capital (NSG-KBC). This work shows that business investment in KBC is a key to future productivity growth and living standards. In many countries, business investment in KBC has increased faster than - and in some countries significantly exceeds - investment in physical capital (like machinery). To promote long-term growth and the jobs of tomorrow, governments must ensure that framework conditions, institutions and policies facilitate business investment in KBC. Emerging economies are also making concerted efforts to help their businesses accumulate KBC. This book sets out policy analyses and recommendations in the fields of: innovation; taxation; entrepreneurship and business development; corporate reporting; big data; competition and measurement.
Competition policy and knowledge-based capital
This chapter explores the relationship between knowledge-based capital (KBC), innovation and competition policy, beginning with an assessment of the theoretical underpinnings and the empirical evidence available to explain the link between market concentration and innovation, including the concept of the inverted U. Two broad recommendations for policymakers emerge: unnecessarily anticompetitive market regulation should be abolished, and effective enforcement of competition law is required to support innovation and economic growth. The chapter then considers the role of intellectual property rights (IPR) in the development and use of KBC. IPR are used heavily in many KBC-focused markets and are often considered to be critical for technological development. Yet the abuse of IPR can discourage or prevent innovation and raise competition concerns. Potential problems include patent ambush in standard-setting, certain exclusionary licensing arrangements, and the strategic accumulation of standard-essential patents by individual firms. Finally, the chapter addresses the question of competition policy within the digital economy, which has much to do with the growing importance of KBC to economic activity.