The Amsterdam meeting starts with the proposition that intellectual capital matters but is invisible. It then investigates the feasibility of improving institutional arrangements for improved measurement and reporting of information on intellectual capital by companies.

By intellectual capital we mean R&D; human resources; organisational capital; customer and supplier networks; software.

 1. Innovation is key to technological change, productivity growth, economic growth, rising standards of living, and social progress.

2. Innovation is intellectual capital intensive; this has been evident at an aggregate level.

(Empirical evidence: Industry Committee Ministerial, Jobs Study, Human Capital Indicators);

But the empirical evidence has not been neat, because our theory, financial accounting and reporting practices, and statistics, have been very much based on an industrial model of the economy, which is based on measuring physical assets.

3. At a micro level, markets have trouble putting a price on intellectual capital because of definitional, measurement and valuation problems. This risks leading to a misallocation of resources. We think that there is an information problem that needs to be addressed.

4. In short there are a series of market failures:

• Managers in hard times will – most probably – under invest in intellectual capital, downsizing on investments such as education and R&D. This results in a misallocation of resources away from the main sources of wealth and competitiveness.
• Blurred market signals to employees possessing high skills and competencies, a group which tends to emphasise not only salary but also possibilities for professional and personal development. This means a malfunctioning of labour markets.
• Investors do not have the right information about innovative companies that typically rely on intellectual capital. For example, innovative SME’s often lack capital.

5 In a global economy, remedies have more impact when they are coordinated; this is particularly true when we are discussing strategies for improving information on intellectual capital.

• At the OECD, Corporate governance principles have been negotiated as a part of an effort to establish international ground rules for improved governance of enterprises and greater transparency in their operations.
• Those ground rules stress the importance of sound disclosure practices to ensure that share holders and stake holders have adequate information on how companies are managing their resources.
• Other issues on the landscape: accounting standards are converging, but towards what? Regardless of whatever agreement on accounting standards is reached, it is clear that much useful information on intellectual capital does not lend itself to financial reporting. The question is whether and how non-financial information can be presented in a way that meets high standards for reliability and credibility.

6. This last issue is the subject of this Conference and one that lends itself to a multi-pronged approach: Development of methods and indicators is a major task, which calls for co-operation to develop better practice. This may best be carried forward on the basis of broad co-ordination and exchange of information. If not, we are likely to see a long period of competing measurement and reporting approaches. This will do little to improve comparability, verifiability and reliability of information on the key intellectual capital assets that are driving the world forward.