$6.9 trillion the volume of global investment in intangible assets in 2023
Software, data, and brands are the fastest growing types of intangible investments over the past decade
The Information and Decision Support Center of the Council of Ministers, through a new analysis, shed light on what Intangible investment and its types, and global trends in the growth of this type of investment, as well as a review of Egypt’s efforts to support its intangible investments, especially intellectual property.
He pointed out that recent years have witnessed a transformation Typical of how value is created and measured in the business world, and in light of the increasing dominance of the digital economy, globalization, and rapid technological progress, the importance of intangible assets has increased, and they have a crucial role in driving companies’ financial performance and market evaluation, and companies with strong intangible assets have become more flexible, and have innovative capabilities and market position; Which enables it to outperform competitors in the long term. These assets provide a basis for sustainable growth and profitability.
The center explained that investment was historically directed primarily towards physical or tangible assets, such as: factories, equipment, and others, and with developments Technologically, economies have increasingly relied on stocks of intangible assets that do not have a physical presence, such as: research, development, knowledge, software, data, design, branding, reputation, organizational expertise, or supply chain and high-level skills; That is, all assets that result from intellectual property or interact with it in some way.
The analysis added that intangible assets can be classified into different categories based on their characteristics and use, and represent intellectual property, such as: patents, copyrights, and trademarks. Commercial, a significant portion of intangible assets. These assets protect the company’s unique creations and provide legal rights over their use or distribution.
In addition to intellectual property, a trademark is an important intangible asset; A strong brand can differentiate a company from its competitors, and build customer trust and loyalty.
Customer relationships are also important intangible assets, and companies that prioritize relationship management often have Customers have a competitive advantage in the market; It can leverage its existing customer base to drive future growth.
In light of the digital transformation that the world has witnessed, software systems are another essential type of intangible assets; Companies rely heavily on software to perform various tasks, including customer relationship management, supply chain management, and data analysis.
Despite their intangible nature, these assets can To contribute effectively to creating and generating value, whether for the economy as a whole or at the level of companies or individuals. At the level of economies, intangible assets constitute an important driver of productivity and GDP growth for countries, and they also have the ability to increase the resilience of economies in the face of major shocks using digital technologies. . At the corporate level, investing in intangible assets plays an important role in enhancing the competitive advantage of companies and their intellectual property, driving innovation and growth, attracting the best talent, developing customer loyalty, and, ultimately, ensuring market success. At the individual level, it affects daily life by promoting innovation, improving the economic conditions of individuals, creating higher-paying jobs, and improving the quality of products.
In this context, the global economy is witnessing a rise Notable in investing in intangible assets; The volume of global investment in intangible assets will reach US$6.9 trillion in 2023 compared to US$2.9 trillion in 1995, more than doubling. In contrast, tangible investments increased by 73%; It rose from $2.7 trillion in 1995 to $4.66 trillion in 2023. Despite economic uncertainty and tightening monetary conditions, intangible investments have proven their resilience to grow at three times the growth rate of tangible investments between 2008 and 2023.
The analysis indicated that in addition to the growth of intangible investment faster than tangible investment, there are some other growth trends for intangible investments that should be highlighted, including: the increasing share of intangible investment in GDP, compared to tangible investment; Whereas in economies with high levels of intangible investment, the gap between tangible and intangible investment as a share of GDP has widened significantly. For example: The share of intangible investment in GDP in the United States of America is nearly twice the share of investment. Intangible investment in 2023.
In contrast, in countries with low levels of intangible investment, the gap between tangible and intangible investment as a proportion of GDP narrowed, with investment catching up Intangible investment compared to tangible investment.
The analysis indicated that the increase in the proportion of intangible investment in the gross domestic product was driven by its increasing economic importance, especially in times of crises. Since intangible investment levels are more resilient than tangible investment levels during economic crises, during the COVID-19 pandemic, tangible investment declined more sharply compared to intangible investment. This is because the nature of intangible investment makes it more flexible and less sensitive to economic shocks that disrupt physical supply and demand compared to tangible investment.
In addition, during the recent period, which has witnessed rising interest rates and a decline in funding for innovation, which has affected capital investment. Investment Money Intangible investment relative to tangible investment has shown remarkable resilience. The resilience of intangible investments can be explained by explaining the change in their ratio to GDP before and after the Covid-19 pandemic. Luxembourg, France, and Sweden were the countries that witnessed an increase in intangible investment as a percentage of GDP between the two periods. On the other hand, Croatia, Slovenia and Slovakia saw the largest decline in intangible investment between the same periods.
The analysis added that in terms of the fastest growing types of intangible investments, software, data and brands were Commercial as the fastest growing type of intangible investments over the past decade. It should be noted that software, data and trademarks grew three times faster than R&D between 2010 and 2018, while investment in other intellectual property products (mineral exploration, artistic, entertainment and literary works) declined during the period from 2011 to 2021.
With regard to the geographical distribution of intangible investment, the United States of America came as the highest country in terms of the volume of intangible investment, followed by 22 countries from the European Union, among which France and Germany followed similar growth paths until the year 2020, after which the level of intangible investment in France rose to a higher level than in Germany. Likewise, Germany began to outperform the UK from 2018 onwards. Other best-performing economies within the 22 European Union countries include: Italy, the Netherlands, Spain, Poland, and Sweden.
Regarding Egypt’s role in supporting its intangible investments, he explained The analysis is that, based on the importance of intellectual property as one of the most prominent types of intangible investment, and believing in its role in promoting innovation and creativity, which is the basis of economic growth and cultural development in any country, Egypt issued Intellectual Property Law No. 82 of 2002, which establishes the legal framework to protect different types of property. Intellectual property, including industrial designs, trademarks, copyrights, and patents. It should be noted that some provisions of this law were amended by Law No. 178 of 2020, in addition to the issuance of the National Intellectual Property Strategy in September 2022. Which is considered a cornerstone of the intellectual property system in Egypt.
Despite the strong framework established by Law No. 82 of 2002, the enforcement of intellectual property rights faces a number of challenges, Among them: the complexities that the world is witnessing in light of digital transformation and the expansion of e-commerce and the accompanying data theft and piracy via the Internet, in addition to the lack of public awareness about the importance of intellectual property rights. This can be overcome through:
-Legislative reforms: by updating intellectual property laws to address emerging challenges, especially those related to digital content and e-commerce. This includes expanding the scope of protection to cover new forms of infringement.
-Public awareness campaigns: enhancing community awareness of the importance of intellectual property rights, by developing educational programs aimed at enhancing commitment to intellectual property rights. Intellectual property and its protection, at the corporate, consumer, professional and legal levels.
– Strengthening international cooperation: Effective cooperation with international organizations to provide the necessary resources and expertise to confront the challenges of intellectual property enforcement. For example, cooperation with the World Intellectual Property Organization and regional intellectual property offices.
The analysis showed that intangible investment currently plays an important role in increasing innovation and creativity and supporting economic growth. In light of the digital transformation that the world is witnessing and the emergence of new technologies, the importance of intangible assets has increased, creating an incentive for many countries to adopt policies that support this type of investment.
