Studies prove
Albert G.Z. Hu 9* and I.P.L. Png**, Department of Economics, National University of Singapore, NUS Business School, National University of Singapore, “Patent Rights and Economic Growth: Evidence from Cross-Country Panels of Manufacturing Industries”, January, http://www.wipo.int/edocs/mdocs/mdocs/en/wipo_ip_econ_ge_5_10/wipo_ip_econ_ge_5_10_ref_huandpng.pdf
The objective of patent rights is to foster innovation and economic growth. However, to date, there is little robust evidence that patents “work”. Here, we applied a difference-in-differences strategy to study the impact of changes in patent rights within panels of up to 54 manufacturing industries in up to 72 countries between 1981-2000. We found that stronger patent rights were associated with faster growth among more patent-intensive industries. During 1991-95, for an industry with average patent intensity, a one standard deviation increase in patent rights (equivalent to an increase from Hong Kong to Australia) was associated with an increase in growth of 0.69% points, or almost a fifth of the average industry growth rate of 3.7%. The effect of patent rights on growth became stronger in the 1990s than in the 1980s. Patents “worked” through both encouraging factor accumulation and technical progress. Our findings were robust to alternative measures of both patent rights and patent intensity, specification of the growth equation and sample, and controls for various possible confounds, including financial development, trade openness, and human capital.