Patents are a bad metric for tech leadership – other factors matter more

There is no easy way to directly measure innovation, so there can be a tendency to use proxies like number patent issued, amount spent on R&D, number of PhDs and publications. It seems reasonable to assume that more R&D spending, more publications, and more patents correlate with more innovation and one of their attractions is that they are easier to count, but by themselves they do not explain strength in technological innovation. Until the last few years, the United States lagged in investment in basic research (the foundation of innovation) and in the infrastructure to support innovation. Yet it has over eighty years outperformed other economies when the measures are the creation of valuable new technologies and national income. The strength of the U.S. “innovation machine” lies somewhere else.

The discussion of technology and innovation relies on indirect proxy measurements, like the number of patents. Patents are a metric that must be used carefully. The assertion that “when a measure becomes a target, it ceases to be a good measure” is particularly true for China’s centrally directed economy, where people perform to meet measures set by Beijing, leading to situation where researchers are rewarded for the number of patents issued (or number of publications) even if no one uses those patents.

Many quantitative measures may not actually measure technological leadership as it relates to national power. Specific metrics such as the percentage of national income spent on R&D or the number of patents issued, are inadequate by themselves to predict technological leadership. It is the ability to use technology for commercial and military purposes that is essential. Looking at the U.S. economy, it is investment in R&D, access to skilled labor, supportive business and intellectual property laws, a dynamic financial system, and an entrepreneurial business culture that explains its overall strength compared to other economies.