Do Patents Portend Productivity Growth? Global Evidence from Private and Public Firms
50 Pages Posted: 25 Dec 2013 Last revised: 4 Aug 2018
Date Written: July 29, 2018
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
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