Background
There is no simple answer! Answers would follow lines like:
- “The national intangible (intellectual) capital includes knowledge assets of individuals, firms, institutions, communities, and government that represent current and potential sources for wealth creation and improved quality of life.” (Malhotra 2003, 24)
- “We would define IC (intangible capital) of nations as all intangible resources available to a country or region, that give relative advantage, and which in combination are able to produce future benefits.” (Stam and Adriessen 2008, 490)
- “[…] national intangible (intellectual) capital is comprised of the knowledge, wisdom, capability, and expertise that provide a country with a competitive advantage over other countries and determine its potential for future growth.” (Lin and Edvinsson 2011, 3)
Breaking up the complexity (and based on extensive literature reviews and since describing intangible capital of a nation requires the articulation of a comprehensive system of variables to help uncover and manage that nation’s invisible wealth) we elaborate the most commonly used four component capitals, namely human capital, market capital, process capital and renewal capital behind NIC:
- Human capital "Capacity and capability of people" at national level constitutes a population’s total capabilities as reflected in education, knowledge, health, experience, motivation, and expertise. These elements represent the key success factors in creating a competitive edge for a nation in the present and the future. Human capital also provides the resources for the development and cultivation of other areas of intellectual assets such as R&D and training, as the human factor is the most important link in the process of value creation.
- Market capital "Global business attractivity" refers to the general assets embodied in the nation’s relationship with the international market. It is the aggregate of a country’s capabilities and successes in providing an attractive, competitive solution to the needs of its international clients.
- Process capital "Operational functionality of the nation" is the cooperation and flow of knowledge that require structural intellectual assets, including information systems and national infrastructure. Such structural intellectual assets sustain and increase the output of human capital.
- Renewal capital "Capacity for knowledge creation, exploitation and innovation" refers to a nation’s capabilities, investments in research and development, and capacity for innovation. It provides the basis for future development.
In short:
As you notice: Human, market, process and renewal capital are inputs (constructors) for organizational, structural and, finally, national intangible capital NIC.
This is a developing story: Next update 12:00 CET 10/05/2016.
Stay tuned!
Any questions? Mail a NIC team member or mail your question to: nic research.
NOTE:
Till official release and publication of NIC 2016 Report in April (2016) we elaborate only NIC 2001-2013/14 public data based analysis and results, i.e. data available to all. Customers find latest NIC 2016 data and analysis results on login area. However: Elaborations and results presented here are tried to be in line with results you will find in the NIC 2016 Report and database.
Background
NIC indexes for human, market, process and renewal capital are calculated following a four step process:
- 1: We normalize basic indicator values to match a basic scale 1 - 10 (For indicators: See indicators below on site).
- 2: We take time into account = Some indicators have real effects only with time lags.
- 3: We look into the structure of the economy and its level of metropolization. Metropol and service focused areas tend to have a higher productivity than rural agricultural areas etc.
- 4: We finally look at the size of the economy, country. Size matters - positively.
Here are some examples of how these steps impact NIC indexes:
As you notice: Effects vary by country and indicator - making NIC indexes more reliable:
This is a developing story: Next update 12:00 CET 11/05/2016.
Stay tuned!
Any questions? Mail a NIC team member or mail your question to: nic research.
NOTE:
Till official release and publication of NIC 2016 Report in April (2016) we elaborate only NIC 2001-2013/14 public data based analysis and results, i.e. data available to all. Customers find latest NIC 2016 data and analysis results on login area. However: Elaborations and results presented here are tried to be in line with results you will find in the NIC 2016 Report and database.
Background
When calculating impacts of NIC we sort of use a residual, left over, approach: We first calculate how much of GDP formation and GDP growth can be estimated by taking
- money, i.e. plant, property and equipment (gross fixed capital)
- total working hours, i.e. workforce times working hour per year
- extraordinary resources (monetary value of natural, i.e. oil and financial, i.e. financial services)
- investments (money) in general intangibles (i.e. IT, software and R&D)
as inputs.
The left over, residual, part of GDP and GDP growth, not explained by these tangible drivers is momentous.
Tangible drivers explain (only) 28 % of GDP formation and productivity growth. Capital (money) and labor (working hours) only 10 %.
We therefore analyse the left over part using three major drivers of the economy:
- MTFP = TFP linked to global markets, trade and networking, i.e. economic performance enhancers embedded in global activity in general
- DTFP = TFP linked to domestic markets, consumption and networking, i.e. economic performance enhancers embedded in domestic activity in general
- NIC = National intangible capital measured with 48 indicators for human, market, process and renewal capital.
Taken together, the first and the second step explain about 77% of GDP formation and productivity growth.
Main MTFP and DTFP indicators
GDP formation break up / Example / USA 2011
GDP growth break up / Example / Denmark 2011
This is a developing story: Next update 12:00 CET 12/05/2016.
Stay tuned!
Any questions? Mail a NIC team member or mail your question to: nic research.
NOTE:
Till official release and publication of NIC 2016 Report in April (2016) we elaborate only NIC 2001-2013/14 public data based analysis and results, i.e. data available to all. Customers find latest NIC 2016 data and analysis results on login area. However: Elaborations and results presented here are tried to be in line with results you will find in the NIC 2016 Report and database.
Background
Strong and weak drivers
Calculating strengths and weaknesses, opportunities and threats (SWOT) or revealed comparative NIC advantage (RCNA) is in fact not so easy. Just looking for , say, 5 highest indexes or best performing indexes is a short cut.
We need to benchmark the drivers and put them in a context.
In calculating the SW drivers (indicators) we do this by first calculating internal strenghts and weaknesses, then global strenght and weakness of driver and finaly strenght and weakness of drivers in active and country specific trade when compared to NIC trade value of driver.
- Internal strenght / weakness is calculated by comparing indicator value to average value within group. E.g. indicators within human capital is compared to average of all human capital indicators. Formally: g = indicator - groupAVG. Motivation: Internal weaknesses and strenghts need to acknowledge intrinsic differences between different NIC capital groups, i.e. human, market, process and renewal capital.
- Global strenght / weakness is calculated simply by comparing each indicator to world average for that indicator. Formally: w= indicator - worldAVG. Motivation: Internal weakness / strenght does not automatically imply that this is true when compared to world averages.
- Strenght / weakness of driver in trade is calculated by comparing to NIC value of trade for indicator. NIC indicator trade value on the other hand is calculated as a weighted average of shares in trade * indicator values for trade partners. Formally: t = indicator -tradeNIC. Motivation: Strenghts and weaknesses need to be measured in the economic realm of production and trade as country specific.
Having calculated g, w and t we calculate a strenght index NIC-sw for each driver (indicator) as:
NIC-sw = (g + w*2 + t*3)/6
High NIC-sw values indicate strenghts wheras low values indicate weaknesses. And we do this on three levels of NIC: 1) Index value, 2) Impact in GDP formation and growth and 3) cost Efficiency of NIC driver. It is up to user / customer to decide which dimension is in focus, more important: index as measure for potential (future), impact as out put value now or effficiency as part of national overall productivity. A motivated bias woud be:
NIC-SW = (index + efficiency*2 + impact*3)/6
but a simple average
NIC-SW = average(index, impact, efficiency)
balances national economic values of NIC alike.
This is a developing story: Next update 12:00 CET 13/05/2016.
Stay tuned!
Any questions? Mail a NIC team member or mail your question to: nic research.
NOTE:
Till official release and publication of NIC 2016 Report in April (2016) we elaborate only NIC 2001-2013/14 public data based analysis and results, i.e. data available to all. Customers find latest NIC 2016 data and analysis results on login area. However: Elaborations and results presented here are tried to be in line with results you will find in the NIC 2016 Report and database.
Background
NIC Tipping points
We define a NIC Tipping point as a point on time line (future) where NIC impacts in GDP formation and growth ceases to grow, i.e. NIC impact stagnates on a certain level.
In order to estimate the existance of a tipping point (in near or far future) we calculate a NIC TP value for each driver (indicator) = annual projected increment on impact in GDP. This is performed by analysing near past and far past behavior of the driver (i.e. we perform trend analyis of driver). Schematically a positive TP value granting growth looks like this:
As you notice the projection is then calculated using best performer as a target / optimal value for impact (strenghtend by 10 %). All values are calcualted on a year to year basis starting 2001. Schematically a negative TP value causing negative growth (declining impacts) looks like this:
Finally we add together (aggregate) the net cumulating effect(s) of all drivers and come to a NIC Tipping point projection for each country:
NIC on the week: Next update 12:00 CET 16/05/2016.
Stay tuned!
Any questions? Mail a NIC team member or mail your question to: nic research.
NOTE:
Till official release and publication of NIC 2016 Report in April (2016) we elaborate only NIC 2001-2013/14 public data based analysis and results, i.e. data available to all. Customers find latest NIC 2016 data and analysis results on login area. However: Elaborations and results presented here are tried to be in line with results you will find in the NIC 2016 Report and database.