DP/08-03

経済財政分析ディスカッション・ペーパー

Intangible Investment in Japan: New Estimatesand Contribution to Economic Growth
Kyoji Fukao
Tsutomu Miyagawa
Kentaro Mukai
Yukio Shinoda
Konomi Tonogi

Economic Research Bureau
CABINET OFFICE

内閣府政策統括官室（経済財政分析担当）

本稿は、政策統括官（経済財政分析担当）のスタッフ及び外部研究者による研究成果をとりまとめたもので、学界、研究機関等、関連する方々から幅広くコメントを頂くことを意図している。ただし、本稿の内容や意見は、執筆者個人に属するものである。

DP/08-03
2008 年 11 月

Intangible Investment in Japan:
New Estimates and Contribution to Economic GrowthContent
Abstract

1. Introduction

2. Measurement of intangible investment in Japan
2.1

Computerized information

2.2

Innovative property

2.3

Economic competencies

2.4

Measurement results for intangible investment in Japan

2.5

Intangible investment by sector

3. Growth accounting

4. Sensitivity analysis

5. Policy implications and future research agenda

References

Appendix 1. Details of the Estimation Method of Intangible Investment

Appendix 2. Correspondence Tables of the Japan Industrial Productivity Database 2006
Sector Classification and International Standard Industrial Classification of All
Economic Activities Third Revision, (ISIC, Rev.3)

1

Intangible Investment in Japan: New Estimates andContribution to Economic Growth

November 2008

Kyoji Fukao(Hitotsubashi University)

Tsutomu Miyagawa(Gakushuin University)

Kentaro Mukai(Cabinet Office, Government of Japan)

Yukio Shinoda(Cabinet Office, Government of Japan)

Konomi Tonogi(Hitotsubashi University)* This paper is a revised version of RIETI Discussion Paper 07-E-034. We thank Dr. Paul Schreyer of theOECD, Dr. Carol Corrado of the Conference Board, Professor Jonathan Haskel of Queen Mary College,
University of London, and the participants of the OECD workshop on Measurement of Intellectual Assets in
National Accounts, the 2007 NBER/CRIW Summer Institute and the National Academies conference on
Intangible Assets for their excellent comments. We are grateful to Professors Bart van Ark and Marcel
Timmer of the University of Groningen and Mr. Yoshiaki Tojo of the OECD for valuable comments on
earlier drafts. Thanks are also due to Mr. Takayuki Sumita of the Ministry of Economy, Trade and Industry
and participants of the seminar at the Research Institute of Economy, Trade, and Industry (RIETI). We
appreciate the excellent research assistance provided by Mr. Sumio Hamagata (Central Research Institute ofElectric Power Industry), Dr. Shoichi Hisa (Takachiho University of Commerce) and Professor Miho
Takizawa (Toyo University). The views expressed in this paper are those of authors and should not be
attributed to any of the organizations which the authors belong to.

2

Abstract

The purpose of this paper is to measure intangible assets, to construct the capital stock of intangible
assets, and to examine the contribution of intangible capital to economic growth in Japan. We follow theapproach of Corrado, Hulten, and Sichel (2005, 2006) to measure intangible investment using the 2008
version of the Japan Industry Productivity Database. We find that the ratio of intangible investment to GDP
in Japan has risen during the past 20 years and now stands at 11.6%, which is lower than the ratio estimatedfor the United States in the early 2000s. The ratio of intangible to tangible investment in Japan is also lower
than equivalent values estimated for the United States. In addition, we find that, in stark contrast with theUnited States, where intangible capital grew rapidly in the late 1990s, the growth rate of intangible capital in
Japan declined from the late 1980s to the early 2000s. In order to examine the robustness of our results, we
also conducted a sensitivity analysis and found that the slowdown of the contribution of intangible capital
deepening to economic growth and the recovery in MFP growth from the second half of the 1990s observedin our base case remain unchanged even if we take on-the-job training and Japanese data with respect toinvestment in firm-specific resources into account.

Keywords: intangible investment, labor productivity, growth accounting.
JEL Classification Code: E22, O32, O47.

Corresponding author:
Tsutomu Miyagawa
Professor of Economics, Department of Economics, Gakushuin University
1-5-1, Mejiro, Toshima-ku, Tokyo, 171-8588, Japan
E-mail: tsutomu.miyagawa@gakushuin.ac.jp

1. Introduction

In the 1990s, the United States enjoyed rapid rates of productivity growth. A major contributing factor
was the revolution in information and communication technology (ICT). The resurgence of US productivity
growth led governments of other developed countries such as the UK, Germany, France, the Netherlands,
and Japan to promote ICT investment in order to catch up with US productivity levels. In Japan, ICT
investment has shown steady growth, increasing at an annual average rate of 8.6% from 1995 to 2005 andreaching 23.5 trillion yen in 2005 (in 2000 constant prices), which is equivalent to 18% of total investment.
Yet, the increase in ICT investment in Japan so far has failed to close the productivity gap with the US.1
Examining the reasons for the productivity gap, we find that a major factor is the low multi-factor
productivity (MFP) growth in services that use ICT, such as distribution services, finance and businessservices, etc., as shown in Table 1. The table also indicates that in the case of the European Union (EU)countries, too, the productivity gap vis-à-vis the US is due to the low productivity growth in ICT-using
services.

(Insert Table 1)

Examining the slow productivity growth in EU countries, van Ark (2004) suggested that the differencewith the US might be explained by differences in the accumulation of intangible assets which play acomplementary role to ICT capital. Studies that have addressed the role of intangible assets include those by
McGrattan and Prescott (2005), who took intangible investment at the macro level into account in order toexplain the solid growth of the US economy during the 1990s, and Corrado, Hulten, and Sichel (2005, 2006) ,who measured intangible investment in the United States and showed the significant contribution of
intangible capital to US productivity growth.
The aim of this paper is to measure intangible investment and to examine its contribution to economic
growth in Japan. We have two reasons for focusing on the measurement of intangible investment. The first is
1

Discussions of recent developments in productivity growth in the US and the role of ICT investment can befound in Corrado, Lengerman, Bertelsman and Beaulieu (2007), Stiroh and Botsch (2007), and Oliner, Sichel
and Stiroh (2007).
1

that we want to check whether trends in intangible investment can explain the productivity gap between the
United States and Japan in the 1990s. The second is that to date practically no studies have been carried out
on intangible capital in Japan. The Japanese government has made an acceleration of economic growth thecornerstone of its economic policy, and given the economic challenges facing Japan, it is crucial tounderstand why productivity growth has lagged behind that in the United States. The role of intangible
capital potentially is one key factor, and understanding if and why this is the case may make an important
contribution to policy design.
Our paper consists of four sections. In the next section, we estimate time series of intangible investment
following the methodology developed by Corrado, Hulten, and Sichel (2005, 2006). We find that the ratio of
intangible to tangible assets is lower in Japan than in the United States. We also estimate intangible
investment by sector and find that the intangible investment/value added ratio in the service sector is much
lower than that in the manufacturing sector. In Section 3, we construct intangible capital by using theintangible investment series and conduct a growth accounting exercise. The results of the growth accounting
with intangible capital show that the contribution of intangible capital to economic growth is small because
the share of intangible capital in total capital is also relatively small. However, this result does not mean thatthe potential role of intangible capital is not important for economic growth. If intangible capital in Japan
were to contribute to economic growth at the same rate as it does in the United States, labor productivity
growth in Japan would be 0.2 percentage points higher than it actually is. In Section 4, we conduct asensitivity analysis focusing on the parameters used for estimating investment in firm-specific resources. We
find that when we take Japanese data concerning firm-specific human resources and organizational structure
into account, the intangible investment/GDP ratio is higher than that estimated in the base case. On the other
hand, the effect of intangible capital deepening becomes smaller than that estimated in the base case, because
the growth in firm-specific human capital in the alternative case is slower than that estimated in the base case.
The last section summarizes our results and their policy implications and discusses future tasks.

2. Measurement of intangible investment in Japan

In this section, we describe how we measure intangible investment in Japan and look at the major
trends in intangible investment. In order to measure intangible investment, we follow the approach of2

Corrado, Hulten, and Sichel (2005, 2006) (abbreviated as CHS hereafter), who classify intangibles into threemajor types of assets: computerized information, innovative property, and economic competencies.
Computerized information consists of, for example, software and databases. Innovative property includes
scientific and nonscientific research and development (R&D), where the latter refers to, for example, mineral
exploitation, copyright and license costs, and other product development, design, and research expenses.
Economic competencies, finally, include brand equity, firm-specific human capital, and organizational
structure.2

2.1 Computerized information

We take data on investment in computerized information from the 2008 version of the Japan Industrial
Productivity Database (JIP Database). 3 This database was constructed by us and other economists andprovides data on the output, intermediate input, and labor and capital input of 108 industries from 1970 to
2005. In the JIP 2008 Database, investment in custom software and packaged software is estimated using
sales data for the information service industry from the Survey on Selected Service Industries and data fromthe Input-Output Tables. The Survey on Selected Service Industries is conducted annually by the Ministry of
Economy, Trade, and Industry (METI) and includes information on the sales, number of workers, assets,
operating costs, and year of establishment about 7000 firms in the service sector, including the information
service industry.
We measure in-house software investment using the ICT Workplace Survey and the Population Census..
The ICT Workplace Survey, which is also conducted annually by METI and provides information on
enterprises and organizations which heavily use ICT equipment with regard to their labor costs, otherexpenditure, and number of employees categorized by job type such as programmers, systems engineers, andnetwork managers. As The ICT Workplace Survey does not cover all workers who are involved in making inhouse software in Japan, we employ the following estimation procedures. From this survey, we take two
types of costs: the first is wages for workers in divisions which are specialized in in-house software2

A detailed description of the measurement of intangible investment is provided in Appendix 1.
The construction of the Japan Industrial Productivity (JIP) Database is described in Fukao et al. (2007). The
database is available from the website of the Research Institute of Economy, Trade and Industry(http://www.rieti.go.jp/en/database/d05.html). A correspondence table for industry classifications in the JIP
Database and the ISIC code is provided in Appendix 2.
33

development and the second is other expenditures in these divisions. Using these values, we calculate thecost of in-house software investment per engineer and programmer. We then multiply the result by the total
number of engineers and programmers in the market economy, which is available from the Population
Census, and derived in-house software investment in the market economy. The estimates for in-house
software investment we arrive at are largely consistent with those obtained by Nomura (2005). Finally,
investment in databases is estimated using sales data for the information service industry from the Survey on
Selected Service Industries and data from the Establishment and Enterprise Census.

2.2 Innovative property

For data on investment in science and engineering R&D, we use the Survey of Research andDevelopment. The Survey of Research and Development is conducted by the Ministry of Internal Affairs andCommunications and includes information on research expenditures categorized by several types of researchexpenses such as material costs, labor costs and depreciation costs for about 19,000 enterprises, universities,
and research institutions. We use the expenses on materials and labor costs for R&D activities from thissurvey as our data on investment in science and engineering R&D. Data on investment in mineral
exploitation were obtained from the Handbook of the Mining Industry and the Annual Report on Natural Gas.
Next, for copyright and license costs, we take data from the JIP 2008 Database, using the nominal output
data of JIP 2008 industry no. 92 (publishing and newspaper industry) and JIP 2008 industry no. 93 (video
picture, sound information, character information production and distribution industry).
As for the measurement of other product development, design, and research expenses, CHS (2005)
summed the following three items: (1) new product development costs in financial services and other service
industries such as book publishing, motion picture production, sound recording production, and broadcasting(such costs account for 20 percent of intermediate purchases in these industries); (2) new architectural andengineering designs which roughly account for half of industry purchased services (CHS (2005) estimatedthis value from the revenues of architectural and engineering design industries reported in the Census
Bureau’s Services Annual Survey); and (3) R&D in social sciences and humanities which is estimated as
twice industry purchased services to include own-account expenses on R&D in social sciences andhumanities (this item is also estimated from the revenues of the Census Bureau’s Services Annual Survey).
4

Here, we estimate investment in (1) using data on intermediate purchases in JIP 2008 industries no. 69(finance industry) and no. 70 (insurance industry). To measure investment in (2), we use the nominal output
data of the design, display, and machinery design industries from the Input-Output Tables as investment in
new architectural design, while for investment in engineering design, we use data from METI’s Survey on
Selected Service Industries. As for (3), we are unable to find suitable data.

2.3 Economic competencies

With regard to investment in brand equity, we follow the approach adopted by CHS (2005), taking 60
percent of the nominal output purchased by other industries from the advertising industry (JIP 2008 industry
no. 85).
Firm-specific human capital is accumulated through both on-the-job and off-the-job training.
Following CHS (2005), we only estimate off-the-job training costs here and assume that these costs consistof two types of expenses: (1) direct firm expenses for off-the-job training of employees; and (2) opportunity
cost (the wage and salary costs of employees’ time spent in getting off-the-job training). In our sensitivity
analysis in Section 4, we estimate on-the-job training costs and examine how our results on Japan’s
intangible investment change when such costs are included.
As for the first item, direct firm expenses, we use data on vocational education costs per worker fromthe General Survey on Working Conditions (Shugyo Joken Sogo Chosa) conducted by the Ministry of Health,Labour and Welfare. The purpose of this survey is to statistically review the wage system, fringe benefits,
and retirement system of Japanese firms. It covers about 5,000 Japanese firms and asks these about training
costs, including the wage and salary costs of employees who teach workers in an off-the-job mode or
employees who support the off-the-job training processes.
As for the second item, opportunity cost, we use the results obtained by Ooki (2003). Using microdata of The Japan Institute for Labour Policy and Training’s Survey on Personnel Restructuring andVocational Education/Training Investment in the Age of Performance-based Wage Systems (Gyoseki-shugi
Jidai no Jinji Seiri to Kyoiku/Kunren Toshi ni Kansuru Chosa), Ooki calculated the average opportunity cost
ratio of off-the-job training to direct firm expenses for training in 1998 for the whole business sector. The
value was 1.51. We use this value to estimate the opportunity cost.
5

CHS (2005) argue that investment in organizational structure consists of a purchased “organizational”
or “structural” component (such as management consultant fees) and an own-account component, which canbe measured in terms of the value of executive time.
With regard to the first component, CHS (2005), Marrano and Haskel (2006), and Marrano, Haskel
and Wallis (2007) use sales data for consulting firms. However, we are not able to find suitable data for the
consulting industry in Japan. As an alternative, we therefore use the nominal output of law firms andaccounting offices. Law firms and accounting offices fall into the business service industry (JIP 2008
industry no. 88), and we separate their nominal output from the total output in the business service industry
using the Input-Output Tables. For the measurement of the second component, own-account investment inorganizational structure, we use the Survey on Financial Statements of Business Enterprises. This survey isconducted annually by the Ministry of Finance and gathers the financial statements of enterprises whose
capital is above 2 million yen. Following CHS (2005), we approximate this component by taking 20 percentof the salaries and bonuses for executives from this survey.

2.4 Measurement results for intangible investment in Japan

Our measurement results are shown in Table 2. Our estimates suggest that the annual average amountof intangible investment in Japan from 2000-2005 was 56 trillion yen. The share of intangible investment in
GDP in the same period was 11.5 percent, which is similar to the estimate for the US by CHS (2006) andlarger than that for the UK by Marrano and Haskel (2006). However, the figure for the US obtained by CHS(2006) is for the period from 1998-2000, and more recent, but as yet unpublished estimates by Dr. Corrado
suggest that the intangible investment/GDP ratio in the US in the early 2000s had reached 13.8 percent,meaning that the equivalent ratio for Japan is lower than that for the US. However, it should be noted that
our measurement of intangible investment in Japan is likely to be an underestimation due to the lack ofreliable data for the estimation of investment in other product development, design, and research, firmspecific human capital, and organizational structure.

(Insert Table 2)6Moreover, comparing the relative levels of intangible and tangible investment in Japan and the UnitedStates, other significant differences emerge. For example, CHS (2006) found that in the United States,
intangible investment was 1.2 times the level of tangible investment. However, according to our estimation,
the ratio of intangible to tangible investment in Japan was only 0.6.
Given that the share of intangible investment in GDP in Japan is similar to that in the US, the low ratio
of intangible to tangible investment in Japan indicates not that investment in intangibles is small, but thatinvestment in tangibles is exceptionally large. Figure 1 shows the ratios of tangible and intangible investment
to GDP in Japan and the US. We find that in Japan, the GDP ratio of intangible investment is still muchsmaller than that of tangible investment, while in the US, intangible investment has exceed tangible
investment since 2000. We suspect that the difference in investment behavior between Japan and the US is atleast partially due to differences in the financial system. In Japan, financial institutions such as banks play amajor role in the provision of corporate funds, and they typically require tangible assets as collateral toprovide financing. As a result, Japanese firms have preferred to accumulate tangible assets which can beused as collateral. In addition, small firms have been hampered in their growth because they often possess
insufficient tangible assets to increase borrowing. These mechanisms as a result of Japan’s financial system
are likely to be important reasons why the ratio of intangible to tangible investment is low in Japan.

(Insert Figure 1)

The share of each type of intangible investment is shown in Table 3. The largest component ofintangible investment in Japan is innovative property with a share of nearly 51 percent in the early 2000s.
The share of computerized information has increased during the past 20 years. Table 4 presents the ratio of
intangible investment to GDP by category. The table shows that all categories contributed to the increase in
the ratio of total intangible investment to GDP. The investment/GDP ratios for computerized information andinnovative property are larger than those estimated for the US and the UK. However, the GDP ratio of
economic competencies is much smaller than those estimated for the US and UK due to the low GDP ratio ofinvestment in firm-specific human capital and organizational structure..

(Insert Tables 3 and 4)
7

2.5 Intangible investment by sector

As discussed in Section 2.1, our measurement of intangible investment mainly relies on the JIP 2008
Database. Because this database includes data on output, intermediate input, labor input, and capital services
in 108 industries, we are able to measure intangible investment by sector. Table 5 shows intangible
investment in the manufacturing sector and the service sector.4(Insert Table 5)

In Table 5, we find that intangible investment in the service sector is larger than that in the
manufacturing sector. However, as for the ratio of intangible investment to value added, the ratio is higher inthe manufacturing than in the service sector due to the high ratio of investment in R&D to value added in theformer. As can be seen in the table, although the total amount of intangible investment in the service sector isgreater than that in the manufacturing sector, the ratio to value added is lower. Moreover, given that the ratio
of intangible investment to value added in Japan’s manufacturing sector exceeds the equivalent ratio for the
US economy as a whole in the early 2000s, it becomes clear that it is the service sector which is responsiblefor dragging the ratio for Japan’s economy as a whole below that of the US. The intangible/tangible
investment ratio is also slightly higher in the manufacturing than in the service sector. We suspect that thereason why firms in the service sector accumulate more tangible than intangible assets is that they are more
dependent on debt finance.

3. Growth accounting

Using the intangible investment data obtained in the previous section, we examine the contribution of
intangible capital to Japan’s economic growth. We obtain real investment series by using the deflators shownin Table 6. We then use the perpetual inventory method to construct the capital stock of intangible assets.
4

The economy as a whole consists of the manufacturing sector, the service sector, and a range of othersectors that include agriculture, forestry, fishing, the mining and construction industries, and the public
sector.
8

The depreciation rates for intangible assets are taken from CHS (2006) and are shown in Table 7. Since dataon intangible investment at 1995 prices are available from 1973, we can use 1980 as the starting point for theconstruction of the capital stock of intangible assets.

(Insert Tables 6 and 7)

The value and growth rate of Japan’s intangible capital stock are reported in Table 8. In 2005, the real
intangible capital stock stood at 210 trillion yen. The growth rate of intangible capital has decreased
drastically from 10.0 percent in the late 1980s to 2.0 percent in the early 2000s. This pattern – rapid growthduring the 1980s but a slowdown during the 1990s and 2000s – is almost the exact opposite of that observedin the United States, where the accumulation of intangible assets accelerated around the middle of the 1990s.

(Insert Table 8)

In order to examine the contribution of intangible capital to Japan’s economic growth, we conduct a
growth accounting exercise. We assume the following Cobb-Douglas type production function:(1) Yt = At ( K tT )α ( K tI ) β L1t−α −βwhere Yt represents GDP, At stands for multi-factor productivity (MFP), K tT is tangible capital, and K tI
stands for intangible capital. From equation (1), we obtain:(2) Δy = Δa + αΔk T + βΔk I + Δl

where Δx =∂ ln X t, and x = ln X t ( x = y, k , l ) . Moreover, k T and k I are the logs of the ratios of∂tcapital stock to hours worked.
The data for all the variables, except for intangible capital and MFP in equation (1), are taken from theJIP 2008 Database. We calculate production factor shares on a cost basis. The labor share is calculated by
dividing labor compensation by nominal total costs. By subtracting the labor share from 1, we obtain the9total capital share. The shares of tangible and intangible capital are calculated by using the share of each typeof capital in total capital.5
The results of our growth accounting exercise based on equation (2) are shown in Table 9, which
compares the results of our growth accounting with intangible capital with the results of a conventional
growth accounting exercise without intangible capital. We find that the contribution of intangible capital to
Japan’s annual economic growth declined from 0.9 percent points in the second half of the 1980s to about
0.5 percentage points in the 1990s. The effect of intangible capital deepening continued to decline in theearly 2000s, because intangible investment in Japan has stagnated since 2002. As a result, the total capital
deepening effect was larger in the growth accounting with intangible capital than in the conventional growthaccounting. Conversely, MFP growth has been slightly smaller in the growth accounting with intangible
capital than in the conventional growth accounting without intangible capital except the second half of the
1990s.

(Insert Table 9)

When we conduct growth accounting by sector, the contribution of intangible capital service to laborproductivity growth declined in both the manufacturing and the service sector in the 1990s. Although laborproductivity growth subsequently recovered in both sectors, intangible capital deepening did not contributeto this recovery in either sector. When we compare growth accounting for Japan and the US, the contributionof intangible capital to labor productivity growth in Japan in the early 2000s was negative, while CHS (2006)
found that the increase in intangible capital in the late 1990s and the early 2000s was responsible for 27
percent of labor productivity growth in the US. If the contribution of intangible capital to labor productivity
growth were as large in Japan as in the United States, then Japanese labor productivity growth in the early
2000s would have been 0.2 percentage points higher than it actually was.

4. Sensitivity analysis

5

As for labor and capital inputs, we took quality into account.
10

In Section 2, we measured intangible investment in Japan following CHS (2005). However, investment
in firm-specific resources depends on the business customs of each country. Therefore, our results withregard to intangible investment in Japan in Section 2 may depend on our parameter assumptions for themeasurement of investment in firm-specific resources in Section 2.3. To examine whether this is the case, we
conduct a sensitivity analysis changing the parameters assumed in the measurement of firm-specificresources in the following two cases.
First, we examine what happens when we assume that the depreciation rate of firm-specific resources is
20 percent rather than the 40 percent assumed by CHS (2006) and used in the above analysis (see Table 7).
Second, we make the following assumptions with respect to firm-specific human capital andorganizational structure:(1) We take account of informal training costs. These are not included in the measurement ofinvestment in firm-specific resources employed CHS (2005), but Japanese firms often utilize on-the-job
training to accumulate firm-specific human capital and they therefore may represent an important element ofintangible investment. Since there are no official surveys providing information on on-the-job training, we
use information on on-the-job training from a survey conducted by the Cabinet Office in 2007 for the Annual
Report on the Japanese Economy and Public Finance 2007. The survey was sent to 979 listed firms of which
818 responded. According to this survey, Japanese workers spend about 9.9 percent of their time on on-thejob training. Therefore, we count 9.9 percent of employees’ wages as on-the-job training costs.6(2) In Section 2, we assume that all off-the-job training activities contribute to the accumulation of
firm-specific human capital. However, according to a survey on household behavior conducted by Keio
University, 63 percent of workers answered that skills gained through off-the-job training supported by
employers would be useful even if they were to change jobs. Above, we count training costs which are usefulfor a specific firm as investment in firm-specific human capital, but the result of the Keio survey implies that
we should not treat all such off-the-job training as investment in firm-specific human capital. Unfortunately,
we do not know how much of the training given to the 63 percent that thought it would be useful also in adifferent job was firm-specific. For our sensitivity analysis, we therefore assume that the training that the 63

6This result is very much in line with informal interviews with Japanese managers we conducted, whichsuggest that about 10 percent of workers’ working time is used for on-the-job training.
11percent received was not firm-specific and only count 37 percent of formal training costs as investment in theaccumulation of firm-specific human capital.
(3) Following CHS (2005), in the analysis above, we assumed that executives spend 20 percent of theirworking time on organizational change. However, according to Robinson and Shimizu (2006), who surveyed
the time use of Japanese CEOs, Japanese CEOs spent only 9 percent of their working time on strategy
development, developing new business, and re-organization. Therefore, as an alternative, we measureinvestment in organizational structure using 9 percent rather than 20 percent of the remuneration of
executives.
Figure 2 shows the sensitivity analysis considering the above modifications. The Base Case is theestimation described in Section 2, the alternative Case 1 is the case where we change the depreciation rate offirm-specific resources, and Case 2 is the case where we consider informal training and Japanese data withrespect to investment in firm-specific human capital and organizational change. We find no substantial
differences between Case 1 and the Base Case. The change in the depreciation rate of firm-specific resources
does not affect the growth accounting results.7(Insert Figure 2)

In Case 2, we find that the intangible investment/GDP ratio (14.2 percent in the early 2000s) is higher
than that in the Base Case because on-the-job training costs are taken into account. In the growth accounting
in Case 2, both labor productivity growth and the capital deepening effect are lower than in the Base Casefrom the late 1990s onward. As lower productivity growth is offset by the low capital deepening effect, theMFP growth rate in Case 2 since the second half of the 1990s is similar to that in the Base Case. Our
sensitivity analysis thus shows that if on-the-job training costs and the working time of Japanese CEOs on
organizational change surveyed by Robinson and Shimizu (2006) with respect to firm-specific resources aretaken into account, the ratio of intangible investment to GDP in Japan is actually higher than that in the USor the UK. In the growth accounting in Case 2, labor productivity growth and the total capital deepening
effect are lower than in the Base Case since the second half of the 1990s. As a result, the recovery in MFP

7

We examine the effect of change in depreciation rate in other components. The results are similar to Case 1.
12

growth from the late 1990s to the early 2000s in Case 2 is similar to that suggested in the Base Caseestimation.

5. Policy implications and future research agenda

The purpose of this paper was to measure intangible assets in Japan. Using our estimates, weconstructed the capital stock of intangible assets and examined the contribution of intangible capital to
Japanese economic growth. The results of our study can be summarized as follows.
First, investment in intangible assets in Japan grew rapidly until 2000. Consequently, the ratio of
intangible investment to GDP also rose during this period. However, the ratio of intangible investment to
GDP in Japan is still lower than the value for the US for the early 2000s estimated by Dr. Corrado. In
addition, the ratio of intangible to tangible investment in Japan is lower than that in the US. One possible
reason for this are differences in the financial system, in particular the fact that much corporate financing inJapan relies on loans from banks which require tangible assets as collateral.
Second, we also estimated intangible investment by sector. We found that it is the service sector whichis responsible for the low intangible investment/GDP ratio overall.
Third, the growth rate of intangible capital in Japan declined from the late 1980s to the early 2000s.
This slowdown stands in stark contrast with the high growth rate of intangible capital in the US in the late
1990s.
Fourth, due to the slowdown in the accumulation of intangible assets, the contribution of intangible
capital to economic growth in Japan turned negative in the early 2000s. The contribution of intangible capitalto total labor productivity growth in Japan has been much smaller that than in the US. If the contribution of
intangible capital to labor productivity growth were as large in Japan as in the United States, then Japaneselabor productivity growth in the early 2000s would have been 0.2 percentage points higher than it actuallywas.
Fifth, the sensitivity analysis has shown that the intangible investment/GDP ratio in Japan exceeds thelevel in the US and the UK if we take on-the-job training and Japanese data with respect to investment in
firm-specific resources into account. However, we find no change in the slowdown of the contribution of13

intangible capital deepening to economic growth and the recovery in MFP growth from the second half ofthe 1990s, which we observed in the Base Case.
Our results have a direct bearing on the debate on how to overcome the low productivity growth in theservice sector that has slowed down aggregate productivity growth in Japan. Service sector activities tend to
be more intangible asset-intensive than manufacturing activities and until now, it has been the tangible assetintensive manufacturing sector which has driven Japan’s economic growth. However, Japan is facing strong
competition in the manufacturing sector from emerging Asian economies such as China, India, and South
Korea, and Japan cannot rely on the manufacturing sector alone to generate economic growth in the future. It
therefore has to promote growth in the service sector in order to attain GDP growth rates of 2 or 3 percent. In
order to achieve such change in economic structure, reforms to the accounting system and the financial
system are necessary. As mentioned in Section 2, firms in the service sector which hold few tangible assets
are stunted in their growth opportunities because they face difficulties in obtaining external finance.
Introducing a new accounting system which also values intangible assets would open the way for banking
and insurance firms to recognize intangible assets as collateral for finance. Therefore, it would be helpful todevise a methodology that aids the valuation of the intangible assets of such firms. In addition, efforts should
be made to transform the current system in which banks dominate corporate financing to a new financial
system in which even small firms can gain access to funds through capital markets.
Our study is in progress and much remains to be done. For example, firm-specific human capital andorganizational structure are likely to be underestimated due to the lack of reliable data. To measure thesemore accurately, we will need to gather data concerning firm-specific human capital and organizationalchange by examining firm-level activities.8
We hope that once we have completed these tasks, we will have a clearer understanding of the role ofintangible assets in promoting Japan’s economic growth through faster productivity growth in the service
sector.

8

One study along these lines is that by Bloom and Van Reenen (2007), who tried to assemble and analyze
data on the organizational structure of firms through interviews with firm managers.
14

References

Ark, B. van (2004), “The Measurement of Productivity: What Do the Numbers Mean?” in G. Gelauff, L.
Klomp. S. Raes, and T. Roelandt (eds.), Fostering Productivity, Elsevier, Amsterdam.
Bloom, N. and J. van Reenen (2007), “Measuring and Explaining Management Practices Across Firms andCountries,” Quarterly Journal of Economics 122: 1351-1408.
Corrado, C., C. Hulten, and D. Sichel (2005), “Measuring Capital and Technology: An Extended
Framework,” in C. Corrado, J. Haltiwanger, and D. Sichel (eds.), Measuring Capital in the New
Economy, The University of Chicago Press, Chicago,.
Corrado, C., C. Hulten, and D. Sichel (2006), “Intangible Capital and Economic Growth,” NBER Working
Paper No. 11948.
Corrado, C. P. Lengermann, E. Bartelsman, and J. Beaulieu (2007), “Sectoral Productivity in the UnitedStates: Recent Developments and the Role of IT,” German Economic Review 8: 188-210.
Fukao, K., S. Hamagata, T. Inui, K. Ito, H.U. Kwon, T. Makino, T. Miyagawa, Y. Nakanishi, and J. Tokui(2007), “Estimation Procedure and TFP Analysis of the JIP Database 2006 (revised),” RIETI
Discussion Paper No. 07-E-003.
Jorgenson, D. W., F. M. Gollop, and B. M. Fraumeni (1987), Productivity and U. S. Economic Growth,
Harvard University Press, Cambridge, MA..
Marrano, M. G. and J. Haskel, (2006) “How Much Does the UK Invest in Intangible Assets?” Department of
Economics Queen Mary University of London Working Paper No. 578.
Marrano, M. G., J. Haskel and G. Wallis (2007), “What Happened to the Knowledge Economy? ICT,
Intangible Investment and Britain’s Productivity Record Revisited,” paper presented at the NBER
Summer Institute 2007.
McGrattan, E., and E. Prescott (2005), “Expensed and Sweat Equity,” Federal Reserve Bank of Minneapolis,Working Paper No. 636.
Nomura, K. (2005), “Turn the Tables! Reframing the Measurement of Capital in Japanese National
Accounts,” paper presented at the Conference on the Next Steps for the Japanese SNA.

15

Ooki Eiichi (2003) “Performance-based Wage Systems and Vocational Education/Training Investment,(Gyoseki-shugi to Kyoiku Kunren Toshi),” Implications of Performance-based Wage Systems for
Individuals and Organizations, in K. Konno (ed.), Chuo Keizai Sha, Tokyo (in Japanese).
Oliner, S., D. Sichel, and Stiroh (2007), “Explaining a Productive Decade,” Brookings Papers on Economic
Activity 2007-1: 81-152.
Robinson, P. and N. Shimizu (2006), “Japanese Corporate Restructuring: CEO Priorities as a Window on
Environmental and Organizational Change,” The Academy of Management Perspectives 20(3):44-75.
Stiroh, K. and M. Botsch (2007), “Information Technology and Productivity Growth in the 2000s,” German
Economic Review 8: 255-280.

16

Table 1: MFP growth and share in total hours worked by sector, major developed economies (%)
1995-2005

Market economy total.Electrical machinery, post andcommunication.Manufacturing, excluding
electrical

MFP growth
FranceGermany

Italy

UK

Japan

Average share in total hours worked
US
FranceGermany
Italy

UK

0.4

-0.7

0.9

100.0

100.0

100.0

100.0

100.0

100.0

5.9

4.7

2.7

3.7

5.0

4.3

4.5

5.1

3.7

4.9

2.2

1.8

1.3

-1.2

0.8

19.4

15.7

18.3

23.4

22.4

18.0

0.0

-0.3

0.7

1.4

-0.1

0.1

20.0

14.3

19.2

15.6

16.6

13.9

0.9

2.1

0.4

1.5

-0.9

1.1

26.2

27.1

24.2

25.8

26.2

26.7

-0.1

0.4

-0.8

-3.3

-0.4

1.1

12.8

21.2

21.1

17.3

13.7

23.0

-0.1

0.0

0.9

-0.7

-2.0

-0.7

16.6

17.4

12.8

12.7

17.4

13.5

Japan

US

0.5

1.7

0.8

5.4

8.7

-0.7

.Other goods producing industries.Distribution services.Finance and business services.Personal and social services

Source: EU KLEMS Database March 2008.

17

Table 2 : Intangible investment by category: comparison among Japan, the US, and the UK
Japan

Computerized information

2000-2005(billion yen)
10,803

US
CHS (2006)
1998-2000(billion US dollars)154

UK
MH (2006)
2004(billion pounds)
19.8

Custom software

6,584

Packaged software

848

In-house software

2,332

Databases

1,039

3

28,629425

37.6

Innovative property
Science and engineering R&D

7.5
151
12.4

13,690184

12.4

Mineral exploitation

16

18

0.4

Copyright and license costs

5,161

75

2.4

Other product development, design, andresearch expenses

9,761

149

22.4

Economic competencies

16,186505

58.8

Brand equity

5,534

140

11.1

Firm-specific human capital

2,241

365

28.5

Organizational structure

8,410

19.2

55,618

1085

116.2

Intangible investment /Value added （％）

11.5

11.7
(13.8)

10.0

Intangible investment/Tangible investment

0.6

1.2
(1.1)

1.1

Total

1) Sources: Japan:authors' calculations, US:Corrado, Hulten and Sichel (2006),
UK:Marrano and Haskel (2006).
2) Figures in parentheses indicate estimates for the period from 2000 to 2003.

18

Table 3 : Intangible investment by category : share in total intangible investment (%)
Japan
1990-1999

1980-89
1980-84 1985-89
7.7
12.2
3.8
6.2
0.4
0.6
2.7
4.3
0.8
1.1

US

UK

1998-2000
14.2

2004
17.0

2000-05
1990-94 1995-99
15.1
17.4
7.4
9.4
0.8
0.8
5.7
5.7
1.3
1.5

Computerized information
Custom software
Packaged software
In house software
Databases

10.0
5.0
0.5
3.5
1.0

Innovative property
Science and engineering R&D
Mineral exploitation
Copyright and license costs

54.1
24.2
0.1
10.2

53.9
24.2
0.2
10.3

54.3
24.2
0.1
10.2

51.7
24.1
0.1
10.0

52.4
23.9
0.1
10.1

51.0
24.3
0.1
9.8

51.3
24.4
0.0
9.3

39.2
17.0
1.7
6.9

32.4
10.7
0.3
2.1

Other product development,
design, and research expenses

19.6

19.3

19.9

17.6

18.4

16.8

17.6

13.7

19.3

Economic competencies
Brand equity
Firm-specific human capital
Organizational structure

35.9
9.4
7.9
18.6

38.3
10.2
7.9
20.2

33.5
8.5
8.0
17.0

32.0
9.3
6.2
16.5

32.4
8.8
6.9
16.7

31.6
9.8
5.5
16.3

29.2
9.9
4.1
15.1

46.5
12.9

50.6
9.6
24.5
16.5

Total

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

16.3
8.4
0.8
5.7
1.4

1) Sources: Japan:authors' calculations, US:Corrado, Hulten and Sichel (2006),
UK:Marrano and Haskel (2006).

19

19.5
11.8
1.5
4.3
1.8

13.9

6.5
10.7

0.3

33.6

100.0

Table 4: The ratio of intangible investment to value added: by category and year (%)
Japan
1990-1999

1980-89
1980-84 1985-89
0.6
1.1
0.3
0.5
0.0
0.1
0.2
0.4
0.1
0.1

US

UK

1998-2000
1.7

2004
1.7

2000-05
1990-94 1995-99
1.4
1.8
0.7
1.0
0.1
0.1
0.5
0.6
0.1
0.2

Computerized information
Custom software
Packaged software
In-house software
Databases

0.8
0.4
0.0
0.3
0.1

Innovative property
Science and engineering R&D
Mineral exploitation
Copyright and license costs
Other product development,
design, and research expenses

4.3
1.9
0.0
0.8

3.9
1.7
0.0
0.7

4.7
2.1
0.0
0.9

5.1
2.4
0.0
1.0

5.0
2.3
0.0
1.0

5.2
2.5
0.0
1.0

5.9
2.8
0.0
1.1

4.6
2.0
0.2
0.8

3.2
1.1
0.0
0.2

1.6

1.4

1.7

1.7

1.8

1.7

2.0

1.6

1.9

Economic competencies
Brand equity
Firm-specific human capital
Organizational structure

2.8
0.7
0.6
0.3

2.8
0.7
0.6
0.3

2.9
0.7
0.7
0.3

3.2
0.9
0.6
0.4

3.1
0.8
0.7
0.4

3.2
1.0
0.6
0.4

3.4
1.1
0.5
0.5

5.4
1.5

5.0
1.0
2.4
1.6

Total

7.9

7.2

8.6

9.9

9.5

10.3

11.5

1.6
0.8
0.1
0.6
0.1

1) Sources: Japan:authors' calculations, US:Corrado, Hulten and Sichel (2006),
UK:Marrano and Haskel (2006).

20

2.2
1.4
0.2
0.5
0.2

1.6
0.0

3.9
11.7

0.6
1.1

10.0

Table 5 : Intangible investment by category in the manufacturing sector and the service sector

ManufacturingsectorServices
sector2000-2005(billion yen)
2,447
1,526
184

Ratio tovalue added(%)(2.09)(1.30)(0.16)

2000-2005(billion yen)
6,125
4,197
388

Ratio tovalue added(%)(2.37)(1.61)(0.15)

In-house software

510(0.45)

1,065(0.42)

Databases

226(0.19)

475(0.18)

13,316(11.22)9,161(3.55)

9,312(7.83)

1,052(0.40)

Mineral exploitation

0(0.00)

16(0.01)

Copyright and license costs472(0.41)

4,152(1.61)

3,531(2.98)

3,940(1.54)

Economic competencies

4,657(3.95)

9,292(3.59)

Brand equity

1,876(1.59)

3,477(1.33)

Firm-specific human capital584(0.49)

1,334(0.54)

Organizational structure

2,198(0.91)

4,480(0.36)

20,420(17.27)

24,577(9.51)

Computerized information
Custom software
Packaged software

Innovative property
Science and engineering R&D

Other product development, design, andresearch expenses

Total
Intangible investment/Tangible
investment

0.9

0.5

Source: Authors' calculation.

21

Table 6: Deflators for intangible investment
Data source and comments
Computerized information
Custom software
Packaged software
In-house software
Databases

Investment deflator in the JIP 2008 Database
Investment deflator in the JIP 2008 Database
Investment deflator in the JIP 2008 Database
Investment deflator in the JIP 2008 Database

Innovative property
Science and engineering R&D
Mineral exploitation
Copyright and license costs

Output deflators for JIP 2008 Database industry nos. 99 and 106
Investment deflator in the JIP 2008 Database
Output deflators for JIP 2008 Database industry nos. 92 and 93

Other product development, design,
and research expenses
Economic competencies
Brand equity

Output deflators for JIP 2008 Database industry nos. 69, 70, and 88

Output deflator for JIP 2008 Database industry no. 85

Firm-specific human capital

Output deflator in JIP 2008 Database industry no. 80

Organizational structure

Output deflator in JIP 2008 Database industry no. 88

22

Table 7: Depreciation rates for intangible assets
Category
Depreciation rate (%)
Computerized information
33
Innovative property
20
Brand equity
60
Firm-specific human capital
40
Source: Corrado, Hulten and Sichel (2006).

23

Table 8 : Real value and growth rate of intangible capital stock
Real value

Growth rate

(billion yen)2005
33,877
20,798
2,709
6,896
3,474

1985-90
12.83
14.32
12.46
13.33
4.06

1990-95
6.66
6.30
1.60
7.04
10.25

138,638
66,593104
25,245

11.53
9.63
-5.73
12.43

4.90
4.05
-1.61
5.26

2.95
3.71
5.30
1.94

2.38
2.44
-7.43
0.91

46,696

14.36

5.93

2.47

3.18

Economic competencies
Brand equity
Firm-specific human capital
Organizational structure

37,232
9,646
5,556
22,030

5.27
4.85
9.02
3.68

2.23
2.04
-1.61
4.34

1.08
4.10
-0.88
1.21

-0.43
1.06
-4.43
1.20

Total

209,747

9.96

4.54

3.34

1.97

Computerized information
Custom software
Packaged software
In-house software
Databases
Innovative property
Science and engineering R&D
Mineral exploitation
Copyright and license costs
Other product development, design,
and research expenses

Source: Authors' calculation.

24(%)
1995-2000
7.99
10.01
10.76
5.49
4.51

2000-05
2.37
4.71
12.83
-6.73
7.96

Table 9-1: Growth accounting with and without intangible capital (Whole Economy)(a) Conventional growth accounting

Growth rate of GDP

1985-90
4.66(%)
1990-95 1995-2000 2000-2005
1.10
0.98
1.53

Growth rate of labor input

0.93

-0.11

-0.52

-0.61

Growth rate of labor productivity

3.73

1.20

1.50

2.14

2.14

1.47

1.13

1.12

1.59

-0.27

0.37

1.02

Contribution of capital deepening
Contribution of MFP growth(b) Growth accounting with intangibles

Growth rate of GDP

1985-90
4.89(%)
1990-95 1995-2000 2000-05
1.06
1.26
1.51

Growth rate of labor input

0.93

-0.11

-0.52

-0.61

Growth rate of labor productivity

3.96

1.17

1.78

2.12

Contribution of capital deepening

2.66

1.75

1.34

1.17

Contribution of tangible capital
Contribution of intangible capital

1.76
0.90

1.25
0.51

0.86
0.48

0.82
0.35

1.30

-0.59

0.44

0.94

Contribution of MFP growth
Source: Authors' calculation.

25

Table 9-2: Growth accounting with and without intangible capital (Manufacturing sector)(a) Conventional growth accounting

Growth rate of GDP

1985-90
4.30(%)
1990-95 1995-2000 2000-05
0.15
1.05
2.16

Growth rate of labor input

0.22

-2.42

-1.85

-1.82

Growth rate of labor productivity

4.08

2.57

2.90

3.98

3.11

2.66

1.37

2.78

0.97

-0.09

1.53

1.20

Contribution of capital deepening
Contribution of MFP growth(b) Growth accounting with intangibles

Growth rate of GDP

1985-90
4.66(%)
1990-95 1995-2000 2000-05
0.27
1.48
2.43

Growth rate of labor input

0.22

-2.42

-1.85

-1.82

Growth rate of labor productivity

4.43

2.69

3.33

4.26

Contribution of capital deepening

3.91

3.34

2.05

2.82

Contribution of tangible capital
Contribution of intangible capital

2.18
1.72

1.84
1.50

0.97
1.08

1.85
0.96

0.53

-0.65

1.29

1.44

Contribution of MFP growth
Source: Authors' calculation.

26

Table 9-3 : Growth accounting with and without intangible capital (Service sector)(a) Conventional growth accounting
1985-90
4.71

1990-95
2.51

1995-2000
1.30(%)
2000-05
1.52

Growth rate of labor input

1.56

0.62

0.06

-0.50

Growth rate of labor productivity

3.15

1.89

1.24

2.02

2.52

1.53

1.23

1.35

0.63

0.36

0.01

0.67

1985-90
4.98

1990-95
2.34

1995-2000
1.56(%)
2000-05
1.84

Growth rate of labor input

1.56

0.62

0.06

-0.48

Growth rate of labor productivity

3.41

1.72

1.50

2.32

Contribution of capital deepening

2.87

1.69

1.33

1.23

Contribution of tangible capital
Contribution of intangible capital

2.09
0.78

1.26
0.43

0.95
0.38

0.91
0.32

0.54

0.03

0.17

1.09

Growth rate of GDP

Contribution of capital deepening
Contribution of MFP growth(b) Growth accounting with intangibles

Growth rate of GDP

Contribution of MFP growth
Source: Authors' calculation.

27

Figure 1: Business investment (Percentage of Business Output)
Japan

%
30

%
18

US

17
25

Intangible Investment

16

Tangible Investment
15

20

15

Intangible Investment

14

Tangible Investment

13
12

10

11
10

5

9
8

0

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
Source: Authors' calculation.

Source: Corrado, Hulten and Sichel (2006).

28

F ig u re 2 : S e n sitivity A n a lysis
F i g ure 2 -1: S hare o f i nta ng ible i nvestment i n Ja pan's G D P

F i g ure 2 -2: C apital d eepening (Inta ng ibles)(% , n o minal)
15.00

1.20
Base Case

14.00
1.00

13.00

Case 1

12.00

Case 2

0.80

11.00
0.60

10.00
9.00

Base Case

8.00

Case 1

7.00

Case 2

0.40

0.20

6.00

0.00
1985-89

1990-94

1995-99

2000-2005

1985-90

F i g ure 2 -3: M F P g row th

1990-95

1995-2000

2000-2005

F i g ure 2 -4: L a bor p roductivity

1.50

4.50

4.00

Base Case

Base Case

1.00
Case 1

3.50

Case 1Case 20.50

Case 2

3.00

2.50
0.00
1985-90

1990-95

1995-2000

2000-2005
2.00

-0.50

1.50

1.00
-1.00

1985-90

S ource: A uthors'calculation.

29

1990-95

1995-2000

2000-2005

Appendix 1. Details of the Estimation Method of Intangible Investment
Component
Computerized
information
Custom software

Packaged software

Estimation method

Method of estimating
industry-level investment

Data
Sources

We used data of custom software investment (JIP asset
classification no. 38). The method employed to estimate
the JIP data is as follows: for recent years, we used
fixed capital formation matrices, which are available infive-year intervals. For intervening years between thesebenchmark years, and extrapolating backwards, we used
the section on the information service industry in theSurvey of Selected Service Industries to estimate
investment. For years after 1983, annual sales of custom
software in “Software development and programming”
in this survey are regarded as custom software
investment. Data for 1982 and before are estimatedusing the share of custom software in “Softwaredevelopment and programming” in 1983 because theshares for these earlier years are not available.
The methodology of estimating packaged software
investment is based on the compilation of the IT capitalstock series in chapter 4 of Cabinet Office, Economic
Analysis No.170, “Productivity by industry andeconomic growth 1970-98.” The total amount ofintermediate input produced by the software service
sector in the Linked Input Output Table 1985-90-95 isused to estimate packaged software investment.
Because the software service sector produces not only
packaged software but also provides data processing,database services, etc., we excluded the sales of data

Manufacturing: We aggregate
custom software investment (JIP
asset classification no. 38) in the
manufacturing sector (JIP industries
nos. 8-59) in the JIP 2008 Database.
Services: We aggregate custom
software investment (JIP asset
classification no. 38) in the service
sector (JIP industries nos. 65-97) in
the JIP 2008 Database.

JIP 2008
Database

Manufacturing: We estimate
packaged software investment in the
manufacturing sector by multiplying
the total amount of packaged
software investment by the ratio of
packaged software sales to the
manufacturing sector to the total of
packaged software sales. The data on
packaged software sales by sector are
taken from the ICT Workplace
SurveyICTWorkplace
Survey andJIP 2008
Databaseprocessing, database services from the total sales in thesoftware service sector by using the Survey of Selected
Service Industries. Annual sales of software products(“Software development and programming”) after 1973
in this survey are regarded as packaged software.

In-house software

We measure in-house software investment using the
ICT Workplace Survey and the Population Census. The
ICT Workplace Survey, which is also conductedannually by Ministry of Economy, Trade and Industry,
provides information on enterprises and organizations
that heavily use ICT equipment, with regard to theirlabor costs, other expenditure, and number of
employees categorized by job type such as
programmers, systems engineers, and network
managers. As the ICT Workplace Survey does not cover
all workers who are involved in making in-house
software in Japan, we employ the following estimation
procedures. From this survey, we take two types ofcosts: the first is wages for workers in divisions which
are specialized in in-house software development andthe second is other expenditures in these divisions.
Using these values, we calculate the cost of in-house

conducted by the Ministry of
Economy, Trade and Industry and
the JIP 2008 Database.
Services: We estimate packaged
software investment in the service
sector by multiplying the total
amount of packaged software
investment by the ratio of packaged
software sales to the service sector to
the total of packaged software sales.
The data on sales of packaged
software by sector are taken from the
ICT Workplace Survey conducted by
the Ministry of Economy, Trade andIndustry and the JIP 2008 Database.
As in the estimation of investment inpackaged software, we estimate
in-house software investment bysector using the ratio of softwaresales obtained from the ICT
Workplace Survey.
Manufacturing: We estimate
in-house software investment in the
manufacturing sector by multiplying
total in-house software investment by
the ratio of the sales of software to
the manufacturing sector to total
software sales. The data on softwaresales by sector are taken from the
ICT Workplace Survey conducted by
Ministry of Economy,
Trade and Industry and the JIP 2008

ICT
Workplace
Survey,Population
Census,Establishment andEnterprise
Census, andJIP 2008
DatabaseDatabases

software investment per engineer and programmer. We
then multiply the result by the total number of engineersand programmers in the market economy, which isavailable from the Population Census, and derive
in-house software investment in the market economy.
We measure the labor costs involved in making
in-house software by multiplying the total labor costsby the share of system engineers and programmers intotal workers. We have to exclude firms in the software
industry and the information service industry whose
workers are involved in making custom software.
Therefore, in-house software investment is estimated bymultiplying the estimated investment by the ratio ofworkers involved in making in-house softwaredevelopment.
From the Survey of Selected Service Industries by the
Ministry of Economy, Trade and Industry, we take dataon the annual sales of data processing and otherdatabase utility service. Sales of database services are
assumed to be investment in intangible assets. However,the Survey of Selected Service Industries does not cover
all firms which produce database services. Therefore,
we estimate the total investment in databases bymultiplying the figure taken from the Survey of Selected
Service Industries by the ratio of the number of firms
in the Survey of Selected Service Industries to thenumbers of firms in the information service industry in
the Establishment and Enterprise Survey. For years inwhich the Establishment and Enterprise Survey was notconducted, we estimated investment in databases bylinear interpolation.

Database.
Services: We estimate in-house
software investment in the service
sector by multiplying total in-house
software investment by the ratio of
the sales of software to the service
sector to total software sales. The
data on software sales by sector are
taken from the ICT Workplace
Survey conducted by Ministry of
Economy, Trade and Industry and
the JIP 2008 Database.

As in the estimations of packaged
and in-house software investment,
we estimate investment in databases
by sector using the sales ratio in the
ICT Workplace Survey and the JIP
2008 Database.
Manufacturing: We estimate
investment in databases in the
manufacturing sector by multiplying
the total amount of investment in
databases by the ratio of sales of
database services to the
manufacturing sector to the total
sales of database services. The dataon sales of database services bysector are taken from the ICT
Workplace Survey conducted by the

ICT
Workplace
Survey,Establishment andEnterprise
Survey, andJIP 2008
Database

Ministry of Economy, Trade andIndustry and the JIP 2008 Database.
Services: We estimate investment in
databases in the service sector bymultiplying the total investment in
database services by the ratio of thesales of database services to theservice sector to the total sales of
database services. The data on salesof database services by sector are
taken from the ICT Workplace
Survey conducted by the Ministry of
Economy, Trade and Industry and
the JIP 2008 Database.
Innovative
property
Science andengineering R&D

The Survey of Research and Development published by
the Ministry of Internal Affairs and Communications
provides data on employment costs, material costs,
depreciation expenses for property, plant andequipment, rent payments for property, plant andequipment, and other expenditures. Among the above
data on R&D expenses, we exclude data for property,
plant and equipment when calculating intangible
investment because we have already included theseassets as tangible assets. We also exclude leasing costs
in calculating intangible investment. Thus, we assume
intangible investment to consist of the sum of
employment costs, material costs, and otherexpenditures. Because the survey is conducted on afiscal-year basis, the values are then converted to acalendar-year basis.

The Survey of Research andDevelopment conducted by the
Ministry of Internal Affairs andCommunications provides data byindustry, so we simply take the dataon research and development
expenditures in the manufacturing
and service sectors provided in thissurvey.

Survey of
Research andDevelopment

Mineral
exploitation

The Mining Industry Handbook and the Establishment
and Enterprise Survey provide data on expenses formineral exploitation (the total expenses for geologicalinvestigation) and we used these two sources for data on
the costs of searching for minerals and expenditures onmineral exploitation.

Because we assume that firms which
conduct investment in mineral
exploitation belong to the service
sector, the total estimated investment
in mineral exploitation is assigned tothe intangible investment in theservice sector.

Copyright andlicense costs

Intangible investment in copyright and license costs is
assumed to consist of the input from the publishingindustry (JIP industry no. 92) and the video picture,sound information, character information production
and distribution industry (JIP industry no. 93) to JIP
industries nos. 1-71 and 73-107.

Manufacturing: The input from thepublishing industry (JIP industry no.
92) ,the video picture, soundinformation, character information
production and distribution industry(JIP industry no. 93) to the
manufacturing sector (JIP industries
nos. 8-59).
Services: The input from thepublishing industry (JIP industry no.
92) and the video picture, soundinformation, character information
production and distribution industry(JIP industry no. 93) to the service
sector (JIP industries nos. 65-97).

Intangible investment in design is estimated using thesales data of the design industry in the Survey of
Selected Service Industries. The survey was conducted
in 1973, 1974, 1979, 1982, 1985, 1990, 1992, 1995,
1998, 2000, and 2003. We calculate the ratio of the

Manufacturing: We take the data on
the design industry’s sales to the
manufacturing and mining industries
provided in the Survey of Selected
Service Industries conducted by the

Handbook of
the Mining
Industry,
AnnualReport on Oiland Natural
Gas
Exploitation
JIP 2008
Database

Other productdevelopment,
design, andresearch expenses
DesignSurvey of
SelectedServiceIndustries,
EstablishmenDisplaysales of the design industry in the Survey of Selected
Service Industries to the nominal output of the otherservices for businesses industry (JIP industry no.88) of
the JIP 2008 Database for each year that the survey was
conducted. The ratio for years in which the survey was
not conducted is obtained by linear interpolation. The
ratio in 2003 is used for years after 2003. Sales in eachyear were estimated by multiplying this ratio by thenominal output of the other services for businesses
industry of the JIP 2008 Database. The estimated valueof sales is adjusted by using the number of firms takenfrom the Establishment and Enterprise Survey because
the Survey of Selected Service Industries is a sample
survey.
The number of firms in the design industry is estimatedusing the Survey of Selected Service Industries and theEstablishment and Enterprise Survey. Intangible
investment in design is assumed to consist of the salesof the design industry estimated from the Survey of
Selected Service Industries multiplied by the ratio of thenumber of firms in the design industry in the
Establishment and Enterprise Survey to the number offirms in the design industry in the Survey of Selected
Service Industries.
We estimate intangible investment in display using thesales data of the display industry in the Survey of
Selected Service Industries. The survey data on thedisplay industry in the Survey of Selected Service
Industries was published in 1981, 1986, 1991, 1994,
1997, 2000, and 2003. The ratio of sales in the display
industry in the Survey of Selected Service Industries tothe nominal output of the other services for businesses

Ministry of Economy, Trade andIndustry. We separate the sales tomanufacturing industry from the dataon sales to the manufacturing andmining industries by using the dataon sales in the other services tobusinesses industry (JIP industry no.
88) in the JIP 2008 Database.
Services: We take the data on thedesign industry’s sales to the service
sector provided in the Survey of
Selected Service Industries
conducted by the Ministry of
Economy, Trade and Industry.

As in the estimation of investment indesign, we estimate investment in
display by sector using the Survey of
Selected Service Industries
conducted by the Ministry of
Economy, Trade and Industry and
the JIP 2008 Database. As forinvestment in display in thet andEnterprise
Survey, andJIP 2008
DatabaseMachine
designindustry of the JIP 2008 Database (JIP industry no. 88)
is calculated for each year that the survey was
conducted. The ratio for intervening years is obtainedby linear interpolation. Sales in each year were
estimated by multiplying this ratio by the nominal
output of the other services for businesses industry of
the JIP 2008 Database. The estimated value of sales isadjusted using the number of firms taken from theEstablishment and Enterprise Survey because theSurvey of Selected Service Industries is a sample
survey.
The number of firms in the display industry is estimatedusing the Survey of Selected Service Industries and theEstablishment and Enterprise Survey. Intangible
investment in display is assumed to consist of the salesof the display industry estimated from the Survey of
Selected Service Industries multiplied by the ratio of thenumber of firms in the display industry in the
Establishment and Enterprise Survey to the number offirms in the display industry in the Survey of Selected
Service Industries.
Intangible investment in machine design is estimatedusing the sales data of the machine design industry in
the Survey of Selected Service Industries. The survey
data on the machine design industry in the Survey of
Selected Service Industries was published in 1983,
1990, 1993, 1996, 1999, 2000, and 2003. The ratio ofsales in the machine design industry in the Survey of
Selected Service Industries to the nominal output of theother services for businesses industry of the JIP 2008
Database (JIP industry no. 88) is calculated for eachyear that the survey was conducted.

manufacturing sector, we take thedata on sales of the display industry
to the manufacturing and mining
industries from the Survey of
Selected Service Industries. We
separate the sales to manufacturingfrom the data on sales to the
manufacturing and mining industries
by using the data on sales in the otherservices for businesses industry (JIP
industry no. 88) in the JIP 2008
Database. As for investment in
display in the service sector, we takethe data on sales of the display
industry to the service sector fromthe Survey of Selected Service
Industries conducted the by Ministryof Economy, Trade and Industry.

As in the estimations of investment
in design and display, we estimate
investment in machine design bysector using the Survey of Selected
Service Industries conducted by the
Ministry of Economy, Trade andIndustry, and the JIP 2008 Database.
As for investment in machine designin the manufacturing sector, we takethe data on sales of the machine
design industry to the manufacturing

Architectural design

The ratio for intervening years is obtained by linear
interpolation. Sales in each year were estimated bymultiplying this ratio by the nominal output of the otherservice for businesses industry of the JIP 2008
Database. The estimated value of sales is adjusted byusing the number of firms taken from the Establishment
and Enterprise Survey because the Survey of Selected
Service Industries is a sample survey.
The number of firms in the display industry is estimatedusing the Survey of Selected Service Industries and theEstablishment and Enterprise Survey. Intangible
investment in machine design is assumed to consist of
the sales of the machine design industry estimated fromthe Survey of Selected Service Industries multiplied by
the ratio of the number of firms in the machine designindustry in the Establishment and Enterprise Survey tothe number of firms in the machine design industry in
the Survey of Selected Service Industries.
Architectural design is included in the other services forbusinesses industry of the JIP 2008 Database (JIP
industry no. 88). To estimate intangible investment inarchitectural design, we multiply the total output in theother business services for businesses industry of theJIP 2008 by the ratio of nominal output of thearchitectural design industry to the total output of theother services for businesses industry for every year.
We calculate this ratio by using the Input-Output Table.

and mining industries from theSurvey of Selected Service Industries.
We separate the sales tomanufacturing industry from the dataon sales to the manufacturing andmining industries by using the dataon sales in the other services tobusinesses industry (JIP industry
no.88) in the JIP 2008 Database. As
for investment in the service sector,
we take the data on sales of themachine design industry to theservice sector from the Survey of
Selected Service Industries
conducted by the Ministry of
Economy, Trade and Industry.

Manufacturing: We estimate
investment in architectural design inthe manufacturing sector bymultiplying the total investment inarchitectural design by the ratio ofsales to the manufacturing sector to
the total sales in the business service
industry. We calculate this ratiousing the data on the other services tobusinesses industry (JIP industry no.
88) in the JIP 2008 Database.
Services: We estimate investment inarchitectural design in the service
sector by multiplying the total

Input andOutput Table
and JIP 2008
DatabaseProductdevelopment infinancialservices
Economiccompetencies
Brand equity

Firm-specifichuman capital
Education
Off-the-job
training (OFF-JT) andtraining

Following CHS (2005), we assumed that 20 percent ofintermediate inputs produced by the financial sector(JIP industry no. 69) and the insurance sector (JIP
industry no. 70) can be regarded as intangible
investment.

investment in architectural design by
the ratio of sales to the service sector
to the total sales of the businessservice industry. We calculate theratio using the data on the otherservices for businesses industry (JIP
industry no. 88) in the JIP 2008
Database.
We assume that all productdevelopment in financial services isconducted in the service sector.

JIP 2008
Database

Following CHS (2005), we assumed that 60 percent of
nominal intermediate inputs produced by theadvertising sector (JIP industry no. 85) can be regarded
as intangible investment.

Manufacturing: We assume that 60
percent of the input from theadvertising industry (JIP industry no.
85) to the manufacturing sector (JIP
industries nos. 8-59) is investment inbrand equity.
Services: Similarly, we assume that
60 percent of the input from theadvertising industry (JIP industry no.
85) to the service sector (JIP
industries nos. 65-97) is investment
in brand equity.

JIP 2008
Database

We use data on vocational education costs per worker
from the General Survey on Working Conditions(Shugyo Joken Sogo Chosa) conducted by the Ministry

Corresponding the industry
classification in the General Survey
on Working Conditions to theGeneralSurvey on
Workingexpenses

Opportunit
y cost of
OFF-JT

On-the-job
training (OJT),
estimation for thesensitivity analysis

of Health, Labour and Welfare. The purpose of thissurvey is to statistically review the wage system, fringe
benefits, and retirement system of Japanese firms. It
covers about 5,000 Japanese firms and asks these about
training costs, including the wage and salary costs of
employees who teach workers in an off-the-job mode or
employees who support the off-the-job training
processes.
For the opportunity cost of off-the-job training in termsof working hours lost, we use the results obtained by
Ooki (2003). Using micro-data of The Japan Institutefor Labour Policy and Training’s Survey on Personnel
Restructuring and Vocational Education/Training
Investment in the Age of Performance-based Wage
Systems (Gyoseki-shugi Jidai no Jinji Seiri to
Kyoiku/Kunren Toshi ni Kansuru Chosa), Ooki
calculated the average opportunity cost ratio of
off-the-job training to direct firm expenses for training
in 1998 for the whole business sector. The value was
1.51. We use this value to estimate the opportunity cost.
We use information on on-the-job training from asurvey, "Survey of New Growth Strategies incompanies," conducted by the Cabinet Office in 2007
for the Annual Report on the Japanese Economy andPublic Finance 2007. The survey was sent to 979 listed
firms of which 818 responded. According to thissurvey, Japanese regular workers spend about 9.9
percent of their time on on-the-job training (weighted
average across all types of regular workers and allindustries). Therefore, we count 9.9 percent of wages ofregular workers as on-the-job training costs.

industry classification in the JIP 2008 Conditions
Database, we take the data on theoff-the-job training costs in the
manufacturing sector and the service
sector respectively.

We assume that the average
opportunity cost ratio of off-the-job
training to direct firm expenses fortraining is identical across industries.

We assume that the average
percentage of regular workers’ timeon on-the-job training is identicalacross industries.

Ooki (2003)

Organizational
structure
Executive
salaries

Following CHS (2005), we assumed that 20 percent ofexecutive salaries in the Financial Statements Statistics
of Corporations by Industry published by the Ministryof Finance can be assumed to be intangible investment.

Legalaffairs,
financialaffairs, andaccounting
services

Legal affairs, financial affairs and accounting services
are included in the other services for businesses
industry of the JIP 2008 Database (JIP industry no. 88).
To estimate intangible investment in the above services,
we multiply the total output of the other services forbusinesses industry of the JIP 2008 by the ratio of
nominal output of the legal affairs, financial affairs andaccounting services industry to the total output of theother business service industry for every year. We
calculate this ratio using the Input-Output Table.

The Financial Statements Statistics
of Corporations by Industry provide
data on the remuneration of
executives by industry. Using these
data, we measure executive
remuneration in the manufacturingsector and the service sector
respectively.
Manufacturing: We estimate
investment in legal affairs, financial
affairs, and accounting services in
the manufacturing sector bymultiplying the total investment inlegal affairs, financial affairs, andaccounting services by the ratio ofsales to the manufacturing sector to
the total sales of the business service
industry. We calculate the ratio using
the data for the other services forbusinesses industry (JIP industry no.
88) in the JIP 2008 Database.
Services: We estimate investment inlegal affairs, financial affairs, andaccounting services in the service
sector by multiplying the total
investment in legal affairs, financial
affairs, and accounting services by
the ratio of sales to the service sector
to the total sales of the businessservice industry. We calculate the

Financial
Statements
Statistics ofCorporations
by Industry

Input -Output
Table and JIP
2008
Databaseratio using the data for the otherservices for businesses industry (JIP
industry no. 88) in the JIP 2008
Database.

Appendix 2. Correspondence Tables of the Japan Industrial Productivity Database 2006 Sector Classification andInternational Standard Industrial Classification of All Economic Activities Third Revision, (ISIC, Rev.3)
International Standard Industrial
The Japan Industrial Productivity
Classification of All Economic
Database 2006 (JIP 2006) Sector
Activities Third Revision, (ISIC,Classification
Rev.3)
4-digitClasses
Code
Sectorcodes
cutting, shaping and
1 Rice, wheat production
0111
finishing of stone
Growing of cereals andMiscellaneous crop
0111
2other crops n.e.c.
farming
Growing of vegetables,
0112 horticultural specialties
and nursery products
Growing of fruit, nuts,
0113
beverage and spice crops
Farming of cattle, sheep,
Livestock and sericulturegoats, horses, asses,
30121
mules and hinnies; dairy
farmingfarming
Other animal farming;
0122 production of animal
products n.e.c.
4 Agricultural services
8520 Veterinary activities
Agricultural and animalhusbandry service
0140
activities, except
veterinary activities
Growing of vegetables,
5 Forestry
0112 horticultural specialties
and nursery products
Hunting, trapping andgame propagation
0150
including related service
activities
Forestry, logging and
0200
related service activities
Fishing, operation of fish
hatcheries and fish farms;
6 Fisheries
500
service activities
incidental to fishing
Mining and agglomeration
7 Mining
1010
of hard coal
Mining and agglomeration
1020
of lignite
Extraction and1030
agglomeration of peat
Extraction of crude1110 petroleum and naturalgas
Service activities
incidental to oil and gas
1120
extraction excluding
surveying
Mining of uranium and1200
thorium ores
1310 Mining of iron ores
1320 Mining of non
Quarrying of stone, sand1410
and clay
Mining of chemical and1421
fertilizer minerals
1422 Extraction of salt
Other mining and
1429
quarrying n.e.c.
Cutting, shaping and2696
finishing of stone
Production, processing
8 Livestock products
1511 and preserving of meatand meat products
Manufacture of vegetable
1514
and animal oils and fats
Manufacture of dairy
1520
products

International Standard Industrial
The Japan Industrial Productivity
Classification of All Economic
Database 2006 (JIP 2006) Sector
Activities Third Revision, (ISIC,Classification
Rev.3)
4-digitClasses
Code Sector
codes
Manufacture of other1549
food products n.e.c.
Production, processing
9 Seafood products
1511 and preserving of meatand meat products
Processing and
1512 preserving of fish and fish
products
Manufacture of vegetable
1514
and animal oils and fats
Manufacture of grain millFlour and grain mill
1531
10
products
products
Processing andMiscellaneous foods and111513 preserving of fruit andrelated products
vegetables
Manufacture of vegetable
1514
and animal oils and fats
Manufacture of grain mill
1531
products
Manufacture of starches
1532
and starch products
Manufacture of bakery
1541
products
1542 Manufacture of sugar
Manufacture of cocoa,
1543 chocolate and sugar
confectionery
Manufacture of macaroni,
noodles, couscous and1544
similar farinaceous
products
Manufacture of other1549
food products n.e.c.
Processing andPrepared animal foods
121512 preserving of fish and fish
and organic fertilizers
products
Manufacture of prepared
1533
animal feeds
Processing and
13 Beverages
1513 preserving of fruit andvegetables
Manufacture of other1549
food products n.e.c.
Distilling, rectifying andblending of spirits; ethyl
1551
alcohol production fromfermented materials
1552 Manufacture of wines
Manufacture of malt
1553
liquors and malt
Manufacture of soft
1554 drinks; production ofmineral waters
Manufacture of tobacco
14 Tobacco
1600
products
Growing of cereals and0111
other crops n.e.c.
Preparation and spinning
15 Textile products
1711 of textile fibres; weavingof textiles
1712 Finishing of textiles
1721 Manufacture of madeManufacture of carpets
1722
and rugs
Manufacture of cordage,
1723
rope, twine and nettingManufacture of othertextiles n.e.c.
Manufacture of knitted
1730 and crocheted fabrics
and articles
Manufacture of wearing
1810 apparel, except fur
apparelDressing and dyeing of1820 fur; manufacture ofarticles of fur
1729

16

Lumber and wood
products

17 Furniture and fixtures

18

Pulp, paper, and coatedand glazed paper

19 Paper products

20

Printing, plate making forprinting and bookbinding

21

Leather and leather
products

22 Rubber products

23 Chemical fertilizers

24 Basic inorganic chemicals

1920 Manufacture of footwear
Sawmilling and planing ofwood
Manufacture of veneer
sheets; manufacture of2021 plywood, laminboard,
particle board and otherpanels and boards
Manufacture of builders'2022
carpentry and joinery
Manufacture of wooden
2023
containers
Manufacture of otherproducts of wood;2029 manufacture of articles
of cork, straw and plaiting
materials
Manufacture of builders'2022
carpentry and joinery
3610 Manufacture of furniture
Manufacture of pulp,
2101
paper and paperboard
Manufacture ofcorrugated paper and2102 paperboard and ofcontainers of paper andpaperboard
Manufacture of other2109 articles of paper andpaperboard
Manufacture of pulp,
2101
paper and paperboard
Manufacture ofcorrugated paper and2102 paperboard and ofcontainers of paper andpaperboard
Manufacture of other2109 articles of paper andpaperboard
2221 Printing
Service activities related2222
to printing
Dressing and dyeing of1820 fur; manufacture ofarticles of fur
Tanning and dressing of
1911
leather
Manufacture of luggage,
1912 handbags and the like,saddlery and harness
1920 Manufacture of footwear
1920 Manufacture of footwear
Manufacture of rubber
tyres and tubes;
2511
retreading and rebuildingof rubber tyres
Manufacture of other2519
rubber products
Manufacture of basic
chemicals, except
2411
fertilizers and nitrogencompounds
2010

Manufacture of fertilizers
and nitrogen compounds
Manufacture of basic
chemicals, except
2411
fertilizers and nitrogencompounds
Manufacture of fertilizers
2412
and nitrogen compounds
Manufacture of2421
pesticides and other agro
Manufacture of other2429
chemical products n.e.c.
Manufacture of basic
chemicals, except
2411
fertilizers and nitrogencompounds
Distilling, rectifying andblending of spirits; ethyl
1551
alcohol production fromfermented materials
Manufacture of basic
chemicals, except
2411
fertilizers and nitrogencompounds
Manufacture of plastics
2413 in primary forms and ofsynthetic rubber
Manufacture of soap anddetergents, cleaning and2424 polishing preparations,perfumes and toilet
preparations
2430 Manufacture of man
Manufacture of basic
chemicals, except
2411
fertilizers and nitrogencompounds
Manufacture of fertilizers
2412
and nitrogen compounds
Manufacture of2421
pesticides and other agro
Manufacture of paints,
varnishes and similar
2422
coatings, printing ink andmastics
Manufacture of soap anddetergents, cleaning and2424 polishing preparations,perfumes and toilet
preparations
Manufacture of other2429
chemical products n.e.c.
Manufacture of2421
pesticides and other agro
Manufacture ofpharmaceuticals,
2423
medicinal chemicals andbotanical products
Manufacture of other2429
chemical products n.e.c.
Manufacture of refined2320
petroleum products
Mining and agglomeration
1010
of hard coal
Mining and agglomeration
1020
of lignite
Manufacture of coke
2310
oven products
Manufacture of glass and2610
glass products
Manufacture of
2692 refractory ceramic
products
Manufacture of cement,
2694
lime and plaster
2412

25 Basic organic chemicals

26 Organic chemicals

27 Chemical fibers
28

Miscellaneous chemical
products

29 Pharmaceutical products

30 Petroleum products
31 Coal products

32 Glass and its products
33 Cement and its products

34 Pottery

35

Miscellaneous ceramic,stone and clay products

36 Pig iron and crude steel

Miscellaneous iron andsteel
Smelting and refining of
38
non-ferrous metals
Non-ferrous metal
39
products

Manufacture of articles
2695 of concrete, cement andplaster
2691 Manufacture of non
Manufacture of
2692 refractory ceramic
products
Manufacture of structural
2693
non
Manufacture of
2692 refractory ceramic
products
Manufacture of structural
2693
non
Manufacture of cement,
2694
lime and plaster
Manufacture of articles
2695 of concrete, cement andplaster
Cutting, shaping and2696
finishing of stone
2699 Manufacture of other non
Manufacture of basic iron2710
and steel2731 Casting of iron and steel
Forging, pressing,
2891
stamping and roll

43

Special industry
machinery

37

Fabricated constructional
40 and architectural metal
products
41

42

Miscellaneous fabricatedmetal products

General industry
machinery

Manufacture of basic
precious and nonProcessing of nuclear
2330
fuel
Manufacture of basic
2720
precious and non
2732 Casting of non
Forging, pressing,
2891
stamping and roll
Manufacture of other2899 fabricated metal products
n.e.c.
Manufacture of insulated
3130
wire and cable
2720

2811

Manufacture of structural
metal products

Manufacture of tanks,
2812 reservoirs and containersof metal
Forging, pressing,
2891
stamping and roll
Treatment and coating of
metals; general
2892 mechanical engineering
on a fee or contract
basis
Manufacture of cutlery,
2893 hand tools and general
hardware
Manufacture of other2899 fabricated metal products
n.e.c.
Manufacture of other2919 general purpose
machinery
Manufacture of domestic
2930
appliances n.e.c.
Manufacture of steam
generators, except
2813
central heating hot water
boilers
Manufacture of cutlery,
2893 hand tools and general
hardware

Manufacture of engines
and turbines, except
aircraft, vehicle and cycle
engines
Manufacture of pumps,
2912 compressors, taps andvalvesManufacture of bearings,
2913 gears, gearing and driving
elements
Manufacture of ovens,
2914 furnaces and furnace
burners
Manufacture of lifting and2915
handling equipment
Manufacture of other2919 general purpose
machinery
Manufacture of other2919 general purpose
machinery
Manufacture of
2921 agricultural and forestry
machinery
2922 Manufacture of machine
Manufacture of2923
machinery for metallurgy
Manufacture ofmachinery for mining,2924
quarrying andconstruction
Manufacture ofmachinery for food,2925
beverage and tobacco
processing
Manufacture ofmachinery for textile,2926
apparel and leather
production
Manufacture of other2929 special purpose
machinery
Manufacture of pumps,
2912 compressors, taps andvalvesManufacture of bearings,
2913 gears, gearing and driving
elements
Manufacture of other2919 general purpose
machinery
Manufacture ofmachinery for textile,2926
apparel and leather
production
Manufacture of other2929 special purpose
machinery
Manufacture of domestic
2930
appliances n.e.c.
Manufacture of other2929 special purpose
machinery
Manufacture of office,3000 accounting andcomputing machinery
Manufacture of ovens,
2914 furnaces and furnace
burners2922 Manufacture of machine
Manufacture of electric3110 motors, generators andtransformers
Manufacture of
3120 electricity distribution
and control apparatus
2911

44 Miscellaneous machinery

45

Office and service
industry machines

Electrical generating,
46 transmission, distribution
and industrial apparatus

47

Household electric
appliances

Electronic dataprocessing machines,
48 digital and analog
computer equipment andaccessories
49

Communicationequipment

Electronic equipment and
50 electric measuring
instruments

51

Semiconductor devices
and integrated circuits

52 Electronic parts

53

Miscellaneous electricalmachinery equipment

54 Motor vehicles

55

Motor vehicle parts andaccessories

Manufacture of other3190 electrical equipment
n.e.c.
Manufacture of domestic
2930
appliances n.e.c.
Manufacture of televisionand radio receivers,
3230 sound or video recording
or reproducing apparatus,
and associated goods

56

Other transportationequipment

57

Precision machinery &equipment

Manufacture of office,3000 accounting andcomputing machinery
Manufacture of other3190 electrical equipment
n.e.c.
Manufacture of televisionand radio transmitters3220 and apparatus for line
telephony and line
telegraphy
Manufacture of medical
and surgical equipment3311
and orthopaedic
appliances
Manufacture of
instruments andappliances for measuring,checking, testing,3312
navigating and otherpurposes, except
industrial process control
equipment
Manufacture of industrial
3313 process control
equipment
Manufacture ofelectronic valves and3210
tubes and otherelectronic components
Manufacture ofelectronic valves and3210
tubes and otherelectronic components
Manufacture of televisionand radio receivers,
3230 sound or video recording
or reproducing apparatus,
and associated goods
Manufacture of
3120 electricity distribution
and control apparatus
Manufacture ofaccumulators, primary
3140
cells and primary
batteries
Manufacture of electric
3150 lamps and lighting
equipment
Manufacture of other3190 electrical equipment
n.e.c.
Manufacture of motor
3410
vehiclesManufacture of
3591
motorcycles
Manufacture of motor
3410
vehiclesManufacture of bodies(coachwork) for motor
3420
vehicles; manufacture oftrailers and semi

Manufacture of parts andaccessories for motor
vehicles and theirengines
Manufacture of
3591
motorcycles
Manufacture of engines
and turbines, except
2911
aircraft, vehicle and cycle
engines
Manufacture of lifting and2915
handling equipment
Building and repairing of
3511
ships
Building and repairing of
3512 pleasure and sportingboats
Manufacture of railway
3520 and tramway locomotives
and rolling stock
Manufacture of aircraft
3530
and spacecraft
Manufacture of bicycles
3592
and invalid carriages
Manufacture of other3599 transport equipment
n.e.c.
Manufacture of medical
and surgical equipment3311
and orthopaedic
appliances
Manufacture of
instruments andappliances for measuring,checking, testing,3312
navigating and otherpurposes, except
industrial process control
equipment
Manufacture of optical
3320 instruments andphotographic equipment
Manufacture of watches
3330
and clocks
Manufacture of plastics
2520
products
Manufacture of otherproducts of wood;2029 manufacture of articles
of cork, straw and plaiting
materials
Publishing of recorded
2213
media
Reproduction of recorded
2230
media
Manufacture of weapons
2927
and ammunition
Manufacture of jewellery
3691
and related articles
Manufacture of musical3692
instruments
Manufacture of sports
3693
goods
Manufacture of games
3694
and toys
Other manufacturing3699
n.e.c.
Agricultural and animalhusbandry service
0140
activities, except
veterinary activities
4510 Site preparation
Building of complete
4520 constructions or parts
thereof; civil engineering
4530 Building installation
3430

58 Plastic products

59

Miscellaneous
manufacturing industries

60 Construction

4540 Building completion

62 Electricity

63 Gas, heat supply

64 Waterworks
65

Water supply forindustrial use

66 Waste disposal
67 Wholesale

68 Retail

Production, collection
4010 and distribution ofelectricity
Manufacture of gas;
4020 distribution of gaseous
fuels through mains
Steam and hot water4030
supplyCollection, purification
4100
and distribution of water
Collection, purification
4100
and distribution of water
Sewage and refuse
9000 disposal, sanitation andsimilar activities
5010 Sale of motor vehicles
Sale of motor vehicle
5030
parts and accessories
Sale, maintenance andrepair of motorcycles and5040
related parts andaccessories
Wholesale on a fee or
5110
contract basis
Wholesale of agricultural
5121 raw materials and live
animals
Wholesale of food,5122
beverages and tobacco
Wholesale of textiles,
5131
clothing and footwear
Wholesale of other5139
household goods
Wholesale of solid, liquid
5141 and gaseous fuels andrelated products
Wholesale of metals and
5142
metal ores
Wholesale ofconstruction materials,
5143 hardware, plumbing andheating equipment andsupplies
Wholesale of other5149 intermediate products,
waste and scrap
Wholesale of machinery,5150
equipment and supplies
5190 Other wholesale
5010 Sale of motor vehicles
Sale of motor vehicle
5030
parts and accessories
Sale, maintenance andrepair of motorcycles and5040
related parts andaccessories
Retail sale of automotive
5050
fuel
5211 Retail sale in non
5219 Other retail sale in non
Retail sale of food,5220 beverages and tobacco in
specialized stores
Retail sale ofpharmaceutical and5231
medical goods, cosmetic
and toilet articles
Retail sale of textiles,
5232 clothing, footwear andleather goods
Retail sale of household
5233 appliances, articles andequipment

Retail sale of hardware,
paint and glass
Other retail sale in5239
specialized stores
5240 Retail sale of second
6511 Central banking
Other monetary
6519
intermediation
6592 Other credit granting
Other financial
6599
intermediation n.e.c.
Administration of
6711
financial markets
6712 Security dealing activities
Activities auxiliary to6719 financial intermediation
n.e.c.
6601 Life insurance
6603 Non
Activities auxiliary to
6720 insurance and pension
funding
Real estate activities
7010 with own or leased
property
Real estate activities on
7020
a fee or contract basis
5234

61 Civil engineering

69 Finance

70 Insurance

71 Real estate

71,72 Real estate,
73 Railway

74 Road transportation

75 Water transportation

76 Air transportation

77

Other transportation andpacking

78 Telegraph and telephone

79 Mail

6010 Transport via railways
Other scheduled
6021
passenger land transport
Other scheduled
6021
passenger land transport
6022 Other non
6023 Freight transport by road
6301 Cargo handling
Other supporting
6303
transport activities
Activities of other6309
transport agencies
Sea and coastal water
6110
transport
6120 Inland water transport
6301 Cargo handling
Other supporting
6303
transport activities
Activities of travel
agencies and tour
6304 operators; tourist
assistance activities
n.e.c.
6210 Scheduled air transport
Non-scheduled air
6220
transport
6301 Cargo handling
Other supporting
6303
transport activities
Activities of travel
agencies and tour
6304 operators; tourist
assistance activities
n.e.c.
6302 Storage and warehousing
Activities of travel
agencies and tour
6304 operators; tourist
assistance activities
n.e.c.
Activities of other6309
transport agencies
Courier activities other6412 than national post
activities
6420 Telecommunications
6411 National post activities

80

Education (private andnon-profit)

81 Research (private)

82 Medical (private)

83

Hygiene (private andnon-profit)

84 Other public services

85 Advertising
86

87

Rental of officeequipment and goods

Automobile maintenanceservices

8010 Primary education
General secondary
8021
education
Technical and vocational8022
secondary education
8030 Higher education
Adult and other8090
education
Social work without
8532
accommodation
Library and archives
9231
activities
Museums activities and9232 preservation of historicalsites and buildings
Botanical and zoologicalgardens and nature9233
reserves
activities
Research andexperimental
7310 development on naturalsciences and engineering(NSE)
Research andexperimental
7320 development on social
sciences and humanities(SSH)
8511 Hospital activities
Medical and dental
8512
practice activities
Other human health8519
activities
Regulation of theactivities of agencies
that provide health care,
7512 education, cultural
services and other social
services excluding social
security
Activities of business and9111
employers organizations
Activities of professional
9112
organizations
7430 Advertising
Renting of construction
4550 or demolition equipmentwith operator
Renting of land transport7111
equipment
Renting of air transport
7113
equipment
Renting of agricultural
7121
machinery and equipment
Renting of construction
7122 and civil engineeringmachinery and equipment
Renting of office7123 machinery and equipment(including computers)
Renting of other7129 machinery and equipment
n.e.c.
Renting of personal and7130
household goods n.e.c.
Maintenance and repair
5020
of motor vehicles
Sale, maintenance andrepair of motorcycles and5040
related parts andaccessories
Maintenance and repair
7250 of office, accounting andcomputing machinery

88

Other services forbusinesses

89 Entertainment

90 Broadcasting

91

Information services andinternet-based services

92 Publishing

Video picture, soundinformation, character
93
information production
and distribution
Eating and drinking
94
places95 Accommodation
96

Laundry, beauty and bathservices97

Other services forindividuals

98 Education (public)

7411 Legal activities
7412 Accounting, bookBusiness and7414 management consultancy
activities
Architectural andengineering activities and7421
related technicalconsultancy
Technical testing and7422
analysisLabour recruitment and
7491
provision of personnel
Investigation and security
7492
activities
7493 Building
Other business activities
7499
n.e.c.
9220 News agency activities
9212 Motion picture projection
Dramatic arts, music and9214
other arts activities
Other entertainment
9219
activities n.e.c.
9241 Sporting activities
Other recreational9249
activities
6420 Telecommunications
Radio and television
9213
activities
7210 Hardware consultancy
Software consultancy
7220
and supply
7230 Data processing
7240 Data base activities
Market research and7413
public opinion polling
Publishing of books,
2211 brochures, musical books
and other publications
Publishing of newspapers,
2212
journals and periodicals
2219 Other publishing
Motion picture and video
9211 production anddistribution
Restaurants, bars andcanteens
Hotels; camping sites and5510
other provision of short
Washing, and (dry-)
9301 cleaning of textile and fur
products
Hairdressing and other9302
beauty treatment
Other service activities
9309
n.e.c.
Agricultural and animalhusbandry service
0140
activities, except
veterinary activities
Repair of personal and5260
household goods
7494 Photographic activities
Adult and other8090
education
9241 Sporting activities
Funeral and related
9303
activities
Other service activities
9309
n.e.c.
Private households with
9500
employed persons
8010 Primary education
5520

General secondary
education
Technical and vocational8022
secondary education
8030 Higher education
Adult and other8090
education
Social work without
8532
accommodation
Library and archives
9231
activities
Museums activities and9232 preservation of historicalsites and buildings
Botanical and zoological
9233 gardens and nature
reserves activities
Research andexperimental
7310 development on naturalsciences and engineering(NSE)
Research andexperimental
7320 development on social
sciences and humanities(SSH)
8511 Hospital activities
Medical and dental
8512
practice activities
Other human health8519
activities
Regulation of theactivities of agencies
that provide health care,
7512 education, cultural
services and other social
services excluding social
security
Compulsory social
7530
security activities
Social work with
8531
accommodation
Social work without
8532
accommodation
Collection, purification
4100
and distribution of water
6301 Cargo handling
Other supporting
6303
transport activities
Activities of travel
agencies and tour
6304 operators; tourist
assistance activities
n.e.c.
7511 General (OverRegulation of theactivities of agencies
that provide health care,
7512 education, cultural
services and other social
services excluding social
security
Regulation of andcontribution to more7513
efficient operation ofbusiness
Ancillary service
7514 activities for thegovernment as a whole
7521 Foreign affairs
7522 Defence activities
Public order and safety7523
activities
Compulsory social
7530
security activities
8021

99 Research (public)

100 Medical (public)

101 Hygiene (public)

102

Social insurance andsocial welfare (public)

103 Public administration

104 Medical (non-profit)

105

Social insurance andsocial welfare (non-profit)

106 Research (non-profit)

107 Other (non-profit)

Sewage and refuse
9000 disposal, sanitation andsimilar activities
8511 Hospital activities
Medical and dental
8512
practice activities
Other human health8519
activities
Compulsory social
7530
security activities
Social work with
8531
accommodation
Social work without
8532
accommodation
Research andexperimental
7310 development on naturalsciences and engineering(NSE)
Research andexperimental
7320 development on social
sciences and humanities(SSH)
Social work without
8532
accommodation
Activities of professional
9112
organizations
9120 Activities of trade unions
Activities of religious
9191
organizations
Activities of political9192
organizations
Activities of other9199 membership organizations
n.e.c.

108
9900

Extra-territorialorganizations and bodies