Does Patenting negatively impact on R&D investment?An international panel data assessment

Although the conventional R&D-patents relationship is a long stand and relatively undisputed issue within the innovation literature, the reverse causality, in particular, the potential for a negative impact of patents over R&D has only recently received wide attention boosting interesting (mainly) theoretical debates. The macroeconomic perspective on this issue, however, remains largely unexplored. In fact, no evidence exists that ruled out the possibility of asymmetric effects of patents on R&D in accordance to the level of GDP in general, and to ‘convergence clubs’ in particular. Using panel data estimation methods on a sample of 88 countries, over an eight-year period (1996-2003), and controlling for clubs of convergence to account for differences on countries’ stages of economic development, we found mix support to the negativity of patent on R&D investment. The accumulated patents positively impact on R&D intensity for the set of less developed countries whereas no statistically significant effect emerges in the case of higher developed converge clubs; restricting the highest developed convergence club down to countries with a R&D intensity above 3%, the negativity reverse causality arises, corroborating the asymmetric impact of patents on R&D investment. We further demonstrate that albeit causality appears to be stronger in the most intuitive appealing traditional direction, evidence supports the theoretical conveyed double causality between R&D and Patent.