Do Patents Portend Productivity Growth? Global Evidence from Private and Public Firms

We explore the relation between a country’s patents and its economic and productivity growth. Consistent with patents reflecting important innovations, a one standard deviation increase in patent stock leads to a 1.58% (1.52%) elevation in GDP (TFP) growth. Patent stock has a stronger impact on growth than other previously documented determinants, including human capital and capital stock. The effect of private firms’ patents on both GDP and TFP growth are double that of public firms. These results support a growing innovation literature, which uses various patent variables as proxies for firm-level innovation, and contends that private firms are more innovative.

Keywords: Innovation, Patents, TFP growth, Economic growth

JEL Classification: D24, O33, O47

Suggested Citation: Suggested Citation

Chang, Xin and McLean, R. David and Zhang, Bohui and Zhang, Wenrui, Do Patents Portend Productivity Growth? Global Evidence from Private and Public Firms (July 29, 2018). Available at SSRN: https://ssrn.com/abstract=2371600 or http://dx.doi.org/10.2139/ssrn.2371600