Page 39 - Intangible value

INTANGIBLE INVESTMENTS STEER THE ECONOMY
ECONOMIST SAMULI RIKAMA / MINISTRY OF EMPLOYMENT AND THE ECONOMY
In the centre of the intangible economy, digitalisation increasingly de nes companies' business activity. Use of digital tools breaks down traditional business models and enables entirely new distribution channels and marketing through the internet. The products are also increasingly often intangible.
Companies' investments have traditionally meant invest- ments in key production factors i.e. machines and equip- ment or buildings. However, along with the intangible economy, the signi cance of tangible investments as a driver of the economy has decreased. Successful busi- ness and competitiveness rely increasingly on intangible factors, such as expertise, innovations, agility or scalabil- ity of operation with help of digital tools.
INTANGIBLE INVESTMENT BY INDUSTRIAL COMPANIES MORE THAT TANGIBLE INVESTMENTS IN 2013
Fixed investments in the manufacturing industry started to decline in 2013, and their value dropped to the level of only €3.1 billion i.e. by seven per cent from the pre- vious year. The research and development expenditures of industrial companies in Finland were slightly under €3.3 billion in 2013.
In other words, intangible investments in industry were about €200 million higher than tangible investments in 2013. Had all the intangible items – such as investments in expertise – been included in the estimates, the dif- ference in favour of intangible investments would have been even bigger. Additionally, xed investments in in- dustry include items, such as software, that are similar to intangibles, which further shifts the emphasis towards intangible investments.
INVESTMENT ACTIVITY FINALLY ON THE INCREASE
Fixed investments in industry nally seem to be grow- ing steadily. The growth anticipated for this year is also broad-based and is seen in almost all industrial sectors. The value of investments is expected to reach over €4.1 billion this year. Just under one third of all xed invest- ments are investments in machines and equipment.
According to the survey, investments in machines and equipment already increased last year, and the increase will accelerate this year.
It is estimated that the level of investments in R&D will be slightly under €3.2 billion this year. The majority of R&D activity is in the technology industry. As the in- vestment activity in companies will improve this year, the balance will clearly tip in the direction of tangible investments.
R&D activity in companies has for some time been slightly in decline and the R&D activity in the strangle- hold of public cost cuts is not likely to start increasing steadily in the coming years, either. As resources are getting scarcer, it is essential to allocate resources with an emphasis on effective R&D activity that encourages internationalisation and scalability of operations.
THE SHARE OF INTANGIBLE INVESTMENTS ON THE INCREASE
The analysis of the time series starting from 1975 shows clearly that, particularly in the past ten years, the share of intangible investments in industry has grown and is ap- proximately on the same level as xed investments.
This re ects the structural change in the entire economy clearly. Before 2000, the share of xed investments dom- inated and the share of R&D activity was small. However, the emphasis of the clear increase in investments antici- pated for 2015 is in xed investments after a very long time.
INTANGIBLE INVESTMENTS ALLOCATED IN THE TECHNOLOGY INDUSTRY
According to Statistics Finland, the R&D expenditures in the technology industry were slightly over €2.7 billion 2013. The technology industry's share was over 80 per cent of all domestic expenditure in research and product devel- opment in industry. According to the survey, investments in R&D in the sector reduced by about seven per cent in 2014, and have remained on the same level this year. The majority of R&D activity in the technology industry is in the electronics and electrical industry.
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