Second, we use these data to perform a sources-of-growth analysis for the UK using the CHS framework. Whilst one might have reservations about the assumptions required for growth accounting (see below), we believe this is also of interest. The main reason is that it enables us to investigate a number of questions that could either not be addressed without these data, or all relegated to the residual. First, as CHS stress, the capitalization of knowledge changes the measures of both inputs and outputs. Insofar as it changes outputs, it alters the labour productivity picture for an economy. Thus we can ask: what was the productivity performance in the late 1990s when the UK economy was investing very heavily (as we document below) in intangible assets during the early stages of the internet boom?
Second, we can then ask: how was that performance accounted for by contributions of labour, tangible capital, intangible capital and the residual? Here we can describe how sources of growth will differ when R&D is capitalized and how other knowledge contributes and alters TFP. Third, we also ask and try to answer this question at industry level. So we can ask, for example, how much productivity in non-R&D intensive sectors, such as trade and finance, was accounted for by other intangibles or was it mostly TFPG?