International Patenting and Technology Diffusion

44 Pages Posted: 15 Sep 2000 Last revised: 23 Jun 2012

See all articles by Jonathan Eaton

Jonathan Eaton

Leonard N. Stern School of Business - Department of Economics; National Bureau of Economic Research (NBER)

Samuel S. Kortum

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: November 1994

Abstract

We model the invention of new technologies and their diffusion across countries. Our model predicts that, eventually, all countries will grow at the same rate, with each country's productivity ranking determined by how rapidly it adopts inventions. The common growth rate depends on research efforts in all countries, while research effort is determined by how much inventions earn at home and abroad. Patents affect the return to invention. We relate the decision to patent an invention internationally to the cost of patenting in a country and to the expected value of patent protection in that country. We can thus infer the direction and magnitude of the international diffusion of technology from data on international patenting, productivity, and research. We fit the model to data from the five leading research economies. The parameters indicate how much technology flows between these countries and how much each country earns from its inventions domestically and elsewhere. Our results imply that foreign countries are important sources of technology even though countries earn most of their return to innovation at home. For example, about half of U.S. productivity growth derives from foreign technology yet U.S. investors earn 98 per cent of the revenue from their inventions domestically.

Suggested Citation

Eaton, Jonathan and Kortum, Samuel S., International Patenting and Technology Diffusion (November 1994). NBER Working Paper No. w4931. Available at SSRN: https://ssrn.com/abstract=226602

Jonathan Eaton (Contact Author)

Leonard N. Stern School of Business - Department of Economics ( email )

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Samuel S. Kortum

University of Chicago - Department of Economics ( email )

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United States

National Bureau of Economic Research (NBER)

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United States

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