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Capturing value in GVCs through intangible assets: The role of the trade–investment–intellectual property nexus

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Abstract

Intangible capital, a broad category of knowledge-based assets lacking physical embodiment, is a key determinant of value capture in global value chains (GVCs). In this paper, we study how policies that govern the trade–investment–intellectual property nexus help countries to increase returns to intangible assets. Using inter-country input–output tables combined with data on factor income, we estimate returns to measured intangible capital (i.e., intangible assets reported in national accounts) and ‘unmeasured’ intangible capital (captured as a residual) in GVCs for a large number of countries and industries over the period 2005–2015. We use these data in an econometric analysis to examine policy determinants, focusing on the package of disciplines on trade, investment, and intellectual property that are increasingly used by countries in their trade agreements. We find that trade and investment openness, intellectual property protection, and competition enforcement are positively associated with returns to intangible assets measured in national accounts. The relationship with unmeasured intangible capital is more complex regarding intellectual property protection and competition enforcement. Our discussion highlights the importance of striking a balance between the different elements of the nexus in order to maximize a country’s potential to benefit from the growing role of intangibles in GVCs.

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ACKNOWLEDGEMENTS

The authors are writing in a strictly personal capacity. The views expressed do not reflect those of the OECD Secretariat or the member countries of the OECD. The authors are grateful to the deputy editor, Ari Van Assche, and three anonymous referees for their helpful suggestions. The authors thank Charles Cadestin for his support and comments. This paper draws inspiration from the authors’ fruitful collaboration with Ali Alsamawi, Charles Cadestin, Joaquim Guilhoto, and Carmen Zürcher. It has also benefitted from suggestions provided by participants of conferences held in Leeds (EIBA) and Stavanger (Geography of Innovation).

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  1. Trade and Agriculture Directorate, OECD, Organisation for Economic Co-operation and Development, 2 rue André-Pascal, 75775, Paris Cedex 16, France

    Alexander Jaax & Sébastien Miroudot

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Jaax, A., Miroudot, S. Capturing value in GVCs through intangible assets: The role of the trade–investment–intellectual property nexus. J Int Bus Policy 4, 433–452 (2021). https://doi.org/10.1057/s42214-020-00086-2

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