The Stock of Intangible Capital in Canada: Evidence from the Aggregate Value of Securities

This paper measures the size of the stock of intangible capital in Canada using newly released data on the market value of all securities in the economy. The approach taken relies on a quantitative application of the q-theory of investment to generate the quantity of capital owned by firms. I find that the intangible capital stock accounted for approximately 30% of overall capital since 1994. Of this, the R&D reported by national accounts makes up only 23%. These results imply that official Canadian statistics failed to account for 26% of the value of the capital stock in their 2005 quarterly data collection. In addition, I find that the magnitude of the intangible capital stock is comparable to that reported using a cost approach, confirming the size of the findings and ascertaining the need to include intangibles in empirical models and in investment data.