Do Patents Stimulate R&D Investment and Promote Growth?

Patent Law Blog (Patently-​​O): Do Patents Stimulate R&D Investment and Promote Growth?:

As back­ground mate­r­ial, this post reviews the siz­able body of empir­i­cal research ana­lyz­ing the impact of patents on R&D invest­ment and eco­nomic growth. Three future posts will present new empir­i­cal research fea­tured in our book Patent Failure. The theme across all four posts is that patents often fail to per­form effec­tively as prop­erty rights. [DDC: To work well as prop­erty, the right should be pre­dictably valid; have dis­cernible bound­aries; and not have an overly frag­mented own­er­ship scheme.]

Economists cher­ish prop­erty rights that pro­vide strong incen­tives for invest­ment and trade, and that thereby con­tribute to eco­nomic growth. Potentially, patent rights could accom­plish these three goals, and surely they some­times do. Apparently though, it is hard to set up and main­tain a patent sys­tem that works as property.

The rise of new mar­ket economies and strength­en­ing of prop­erty rights around the globe in the last two decades pro­vides econ­o­mists with ‘nat­ural exper­i­ments’ that help us eval­u­ate whether and how much prop­erty rights con­tribute to invest­ment and growth. The empir­i­cal results are impres­sive. Countries that expanded the role of mar­kets and strength­ened prop­erty rights have pros­pered from these choices. Economic his­to­ri­ans find the same results hold going back to the Industrial Revolution.

Another look at my cur­rent inter­est: is IP (as cur­rently con­sti­tuted) really ben­e­fi­cial across devel­oped and devel­op­ing countries?

For more on this par­tic­u­lar book and argu­ment, see:

• The book’s site
• Research on Innovation work­ing papers

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