Patent rights and economic growth: Evidence from cross-country panels of manufacturing industries

Abstract

The objective of patent rights is to foster innovation and economic growth. However, to date, there is little robust evidence that patents achieve this objective. Here, we study the impact of changes in effective patent rights within panels of up to 54 manufacturing industries in up to 72 countries between 1981-2000. Stronger patent rights were associated with faster growth in more patent-intensive industries, and the effect was larger in higher-income countries. Between 1991-1995, an increase in the level of effective patent rights from Turkey to Singapore was associated with the average growth of the other chemicals and leather industries being respectively 1/6 and 1/17 higher. Patent rights were associated with faster growth through both factor accumulation and raising productivity. Our findings were robust to alternative measures of patent rights and patent intensity. © Oxford University Press 2013. All rights reserved.