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The effect of foreign and domestic patents on total factor productivity during the second half of the 20th century

  • Antonio Cubel
  • Vicente Esteve
  • Maria Teresa Sanchis
  • Juan A. Sanchis-Llopis
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    This paper analyses the relationship between total factor productivity (TFP) and innovation-related variables during the second half of the 20th century. We perform this analysis for several European countries (France, Germany, the United Kingdom, and Spain) and the U.S., extending Coe and Helpman’s (1995) empirical specification to include human capital. We use a new dataset of patents data for the past 150 years to calculate the stock of knowledge using the perpetual inventory method. Our time series empirical analysis confirms the heterogeneous relationship between innovation variables (domestic stock of knowledge, imports of knowledge, and human capital) and productivity. Our results reveal the extent to which observed differences in technology adoption patterns and the levels of endowment of such resources can explain differences in TFP dynamics across countries. The estimated coefficients confirm the considerable gap that still exists between the European countries and the U.S. in innovation-related variables. Furthermore, we obtain a finding that may have important implications for innovation policies: the higher the level of investment in human capital, the higher the level of investment in domestic innovation, and the higher the response of TFP to a 1% increase in any of the aforementioned variables.

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    File URL: http://www2.uah.es/iaes/publicaciones/DT_06_14.pdf
    File Function: First version, 2014
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    Paper provided by Instituto Universitario de Análisis Económico y Social in its series Working Papers with number 06/14.

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    Length: 35 pages
    Date of creation: May 2014
    Date of revision:
    Handle: RePEc:uae:wpaper:0614
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    1. Zvi Griliches, 1984. "R&D, Patents, and Productivity," NBER Books, National Bureau of Economic Research, Inc, number gril84-1, August.
    2. repec:fth:harver:1473 is not listed on IDEAS
    3. Lichtenberg, Frank R. & Pottelsberghe de la Potterie, Bruno v., 1998. "International R&D spillovers: A comment," European Economic Review, Elsevier, vol. 42(8), pages 1483-1491, September.
    4. Zvi Griliches, 1998. "Patent Statistics as Economic Indicators: A Survey," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 287-343 National Bureau of Economic Research, Inc.
    5. Timmer, Marcel P. & Ypma, Gerard & Ark, Bart van der, 2003. "IT in the European Union: driving productivity divergence?," GGDC Research Memorandum 200363, Groningen Growth and Development Centre, University of Groningen.
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