The NDN Globalization Initiative has released a report entitled "The Idea-Based Economy and Globalization: The Real Foundations of American Prosperity in the 21st Century," by Dr. Robert J. Shapiro.

He writes of the changing landscape of economic value:

Federal Reserve data show that since the mid-1990s, U.S. companies have invested as much in intangibles–mainly the intellectual property of patents and trademarks, as well as databases, branding, organizational changes and the training or human capital to use these ideas–as in physical assets, from equipment to land and buildings. For the first time, intangible assets are more important business investments than physical assets.

This shift is evident in the way U.S. and international investors value America’s public companies. In 1984, the market value of the physical assets of the top 150 U.S. public companies – their “book value” – accounted for 75 percent of the total value of their stocks. A firm was worth nearly what its plant, equipment and real estate could be sold for. By 2004, the book value of the top 150 U.S. corporations accounted for 36 percent of the total value of their shares. Nearly two-thirds of the value of large companies now comes from what they know and the ideas and relationships they own.

and continues:

To keep their progress going, China and other fast-developing countries will have to keep on attracting and absorbing the new ideas being developed today and in the near-future by American and other Western companies. To do that, China and others will have to accept the strategic bottom line of modern business and adopt western intellectual property protections.

Other interesting observations on labor and management follow.

posted by Solveig Singleton @ 9:51 AM | International, Markets: Business, Investment & Innovation

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