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

50 Pages Posted: 25 Dec 2013 Last revised: 4 Aug 2018

See all articles by Xin (Simba) Chang

Xin (Simba) Chang

Nanyang Business School, Nanyang Technological University

R. David McLean

Georgetown University - Department of Finance

Bohui Zhang

The Chinese University of Hong Kong, Shenzhen

Wenrui Zhang

The Chinese University of Hong Kong (CUHK) - Department of Finance

Date Written: July 29, 2018

Abstract

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

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

Xin Chang

Nanyang Business School, Nanyang Technological University ( email )

S3-B1B-76 Nanyang Avenue
Singapore, 639798
Singapore

HOME PAGE: http://www.ntu.edu.sg/home/changxin

R. David McLean (Contact Author)

Georgetown University - Department of Finance ( email )

3700 O Street, NW
Washington, DC Washington DC 20057
United States

Bohui Zhang

The Chinese University of Hong Kong, Shenzhen ( email )

Wenrui Zhang

The Chinese University of Hong Kong (CUHK) - Department of Finance ( email )

Shatin, N.T.
Hong Kong

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