Meta-analysis concludes patent protections cause innovation.

Pedro Cunha, The link between intellectual property rights, innovation, and growth: A meta-analysis, Economic Modelling,

***NOTE: IPR = Intellectual Property Rights

In this paper we examined the empirical trends in the relationship between IPR, innovation, and growth. We began by emphasizing the increasing importance of IPR protection on innovation encouragement, as well as their influence on growth. Then, by means of a meta-analysis we conducted a quantitative analysis of the empirical literature that estimates the effect of the IPR on Innovation and Growth. Our approach allowed us to summarize and to systematize the empirical results of this literature and advance some explanations for the divergent results in this research field.

An important conclusion regarding the estimation of the impact of IPR on growth is that the results are influenced by publication bias, which means that editors prefer to publish studies reporting results of greater statistical significance. After correcting for this type of bias we found that the average effect of IPR on growth is positive, as is the average effect of IPR on innovation.

The meta-analysis also revealed that the effect of IPR on innovation varies with countries’ development level. It is weaker in developing countries, where investment in innovative activities is low and it is preferable to imitate external innovations, than in developed countries, where firms understand more effectively the importance that IPR have on innovative activities, the capital available to invest is high, and subsidization policies have more powerful effects. We also found that the heterogeneity in the reported effects of IPR can be explained by differences in studies’ methodological characteristics, such as the data structure, level of data/analysis, measurement of IPR, sample size, or publication quality.

The results of this work have relevant policy implications. For example, they imply that developing countries do not benefit significantly from policies that strengthen the degree of IPR protection. Instead, policies oriented to promote imitation of innovations from abroad could be more suitable for developing economies and contribute to rapid economic growth. On the contrary, in developed countries policies that strengthen IPR protection play a crucial role in fostering innovation and economic growth.