Accounting for productive investment and value creation

The increased size and influence of financial institutions and markets has widened the scope for divergence between value-creation and the value-added measured by national accounts. This paper uses a re-assessment of the concept of value, showing how its creation can be separated from income flows,...

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Bibliographic Details
Published in:Industrial and corporate change 2014-08, Vol.23 (4), p.1059-1085
Main Authors: Mazzucato, Mariana, Shipman, Alan
Format: Article
Language:English
Subjects:
Capitalization
Economic theory
Financial institutions
Financial services
GDP
Gross Domestic Product
Growth models
National accounts
Research & development expenditures
Structural change
Studies
Valuation methods
Value theory
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Summary:The increased size and influence of financial institutions and markets has widened the scope for divergence between value-creation and the value-added measured by national accounts. This paper uses a re-assessment of the concept of value, showing how its creation can be separated from income flows, to examine its potential under- or over-representation in conventional GDP. A revived (and revised) value theory offers new insight into the impact on measured income and growth of structural change (including financial sector growth and offshore outsourcing), and of recent national-accounting reforms including the capitalization of R&D spending.
ISSN:0960-6491
1464-3650
DOI:10.1093/icc/dtt037