On the origins of the worldwide surge in patenting: An industry perspective on the R&D–patent relationship

What are the sources of the worldwide surge in patent applications and how are they related to R&D investment at the industry level?

Understanding the dynamics of patenting activity is crucial for policymakers, firms, and researchers because patent statistics serve as important indicators of technological change and competitive advantage. The recent surge in patents suggests that simply increasing R&D spending may not lead to proportional increases in innovation output, indicating a need to look at how firms appropriate and file for patents strategically. This knowledge can inform how we structure intellectual property laws and encourage innovative activity across industries.

We analyzed a unique panel data set comprising 18 industries across 19 countries from 1987 to 2005, employing five different patent indicators to explore the R&D–patent relationship. The econometric model uses error correction methods to estimate both short-term and long-term elasticities between R&D expenditures and patent outputs, while taking into account fixed effects for industries and countries.

We find a long-term elasticity of patents with respect to R&D of approximately 0.12, indicating that R&D has a significant but modest influence on patenting activity. We also confirm that variations in the propensity to patent and filing strategies are critical in explaining variations in patent applications, noting in particular that R&D accounts for only about 1 to 5% of the variance in patenting across different model specifications. These findings highlight that the increase in patent filings is largely driven by globalization and strategic behavior rather than by increased research productivity alone.

• A unique panel data set covering 18 manufacturing industries in 19 countries from 1987 to 2005, with patent indicators derived from the OECD–EPO PATSTAT database.

• The relationship between R&D and patents is influenced by both research productivity and firm-level strategies for patenting.
• Variations in patent applications can be attributed to differences in appropriability strategies and filing strategies across industries.
• The fixed-effects approach accounts for unobserved heterogeneity across industry-country pairs.