Page 276 - Special Topic Session (STS) - Volume 4

STS587 Hui W. et al.
longer refers to specific products. Exact units of measurement are somewhat
fuzzy.
(6) Output measurement for services
Data are available on the value or cost of product transacted for service
producing industries, but hard to measure real output. The key issue is how to
decompose value into meaningful quantity (measurement unit) and price
components.
(7) The case of health care services
The patient purchases medical treatment for improving his or her health
status. Disease treatment is the output of health care services. The
fundamental problem is to separate the value of medical expenses into price
and quantity components in order to measure real output of health care. In
what units do you measure output- not necessarily by the visit or the
procedure. This is doctors’ “output”. It is challenging to determine the level of
output and tell if improvements in technology have increased outcome-based
output over time?

3.2 New problems – intangibles and impact of globalization
New diseases have developed: Increasing role of intangible capital;
Globalization blurs national boundaries.
(1) Intangible capital
In the digital economy, investment in intangibles has become the
dominant source of business capital formation, far outstripping the rate of
investment in tangible plants and equipment. Measuring intangible capital
presents a host of problems, since much of it is produced with firms on "own
account" without a market transaction to fix prices and quantities. R&D, a key
component of intangibles, is capitalised in national accounts in OECD
countries by input approach.
(2) Economic impact of globalisation
Globalisation is the process of integrating national economic structure and
production with the rest of the world ad blurs national boundaries. Firms
organise their production and marketing at a global level, often spanning
several countries. Household and firm spending become more international.
Capital, in particular intellectual property, can be used simultaneously across
the world in a multinational enterprise. Labour is mobile and income returned
to home country can be an important part of national disposable income.
(3) Transactions brought about by globalization
Trade in services——Call centres, Software programming, Legal and
accounting services, Medical services. Globalisation of production——
Smartphone: design & software in U.S., assembled in China. Car
manufacturing: bumper, seatbelts, climate controls, etc, in different countries.
Clothes: cost is 20% of retail price, made in emerging economies.

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