computer software has more than doubled between 2000 and 2008, experiencing the fastest growth rate among all segments of intangible assets in Brazil.

Expressed as a percentage of GDP, the US spends more than Brazil on all types of intangibles. But the gap in their spending is particularly large in the case of economic competencies, especially employee training and organizational improvement. As a share of GDP, US spending on this category is roughly four times that of Brazil. Thus, there is a striking difference in the composition of their intangible expenditures, with economic competencies accounting for as much as 53 percent of all intangible asset expenditures in the US, as opposed to less than 35 percent in Brazil. This finding of relative underinvestment in training and management is consistent with a recent study which finds high and unexploited returns to organizational improvements in a sample of Indian firms (Bloom et al. 2012). It may be appropriate for policy makers in developing countries to be concerned about why firms appear to be under-investing in economic competencies.<sup>8</sup> CHS and similar studies focused on measuring aggregate investment. Going a step further, we also provide industry-level estimates of intangible investment.<sup>9</sup> As expected, those manufacturing industries which broadly speaking are more technology-sophisticated on average (such as chemical products, machinery and equipment, electronics) invest a larger proportion of their revenue in computerized information and innovative property than relatively less technologically-sophisticated industries on average (such as food products or textiles). Interestingly, firms in less technologically-sophisticated manufacturing industries invest as much in economic competencies as more sophisticated manufacturing industries. But by the standards of advanced economies, both are investing very little in this area, and worryingly, there is sign of a slowdown in this spending. Further, the services sector invests even less than the manufacturing sector in economic competencies.

> 8 Note that there is no presumption that U.S. levels of investment in intangible assets are optimal, either for the U.S. or for other countries. However, more systematic collection and compilation of these data facilitate more informed discussions on where returns to investment in different types of intangible assets are highest, and why such investments remain lower than desirable. Before jumping to policy implications, it would be important, among others, to identify true shortfalls in investment in particular types of intangible assets from low levels explained by other drivers of investment patterns, such as endowments, industrial structure, technological capabilities, and the broader business environment. See Maloney and Rodriguez-Clare (2007) on the kind of analysis that could be undertaken to determine whether the R&D investment in a particular country is lower than would be expected given its underlying pattern of specialization, and its investment in physical and human capital.

> 9 Subject to limited availability of data disaggregated by industry for some types of intangible investments.

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