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Quick Quiz: When is the Sequel Better than the Original?
By Ashley Mergen
Sometimes it’s hard for the sequels to live up to the original. However, in the case of the Bureau of Economic Analysis (BEA)’s comprehensive revision of America’s official GDP numbers, the sequel has far outdone the original. The revised numbers, which now take into account the considerable investments of intellectual property (IP)-intensive industries, reveal that research and development and entertainment added $471 billion to the revised $16.2 trillion overall economy.
So what does this all mean? Basically, the Department of Commerce is updating the measure it uses to keep a pulse on our economic wellbeing by incorporating the investment in knowledge-based output, like entertainment or pharmaceuticals. Before, investment was categorized as a measure of investment in hard goods, but now it incorporates the extensive investment research and development of our creative and innovative industries. Motion Picture Association of America chief Senator Chris Dodd explained:
“The change reflects that in economic terms, film and television works are an intangible asset, not an expense. Long after they’re first developed, these creations continue to retain their value and deliver residual benefits. Films and TV shows, for instance, are licensed and sold to different markets for years — even decades — after their original release. It goes without saying that when productions decide to film a movie or television show in a local community, they invest a great deal of money there when they create production facilities, employ local workers as members of the cast and crew, and rely on local small businesses over the course of production — now the impact of that production investment is being reflected in the national economic calculations as well.”
The assurance of IP rights embodied in copyrights, patents, and trademarks further encourage investment in knowledge-based innovation, which, by nature sees a lag before resources can be recouped. BEA’s new outlook demonstrates that IP-intensive industries are not only driving innovation, but are at the helm of driving our economy forward.
More importantly, BEA’s Robert Kornfeld says that the revisions will “give policymakers and investors a more complete way to think about prospects for growth — and how much (or little) companies are investing to make growth happen.”
The clear and significant economic impact that the government has recognized reinforces the importance of policies to promote innovation in America. The new measure of GDP by BEA is more than a recalculation of dollar signs and financial statistics, but in fact the recognition of the immense position IP has in the long-term strength of our economy.