Brookings: The Geography of U.S. Patenting Activity, Economic Growth

Invention is a driver of economic growth. That is the assertion of Brookings latest report on U.S. patenting and its effect on the country's economic prosperity entitled Patenting Prosperity: Invention and Economic Performance in the United States and its Metropolitan Areas. The U.S.'s innovative capacity and activity has increased steadily, but other nations are catching up and the U.S. must identify the implications of this fact to remain competitive. Authors Jonathan Rothwell, José Lobo, Deborah Strumsky, and Mark Muro compiled USPTO patent information from 1975 to 2012 detailing the quality of the patent, the metropolitan area of residence of the inventor, the industrial orientation of the patent and other relevant material. They found that high rates of patenting coincide with greater productivity, lower unemployment and the creation of publicly traded companies within U.S. Statistical Metropolitan Areas. The correlation is strong enough that the authors claim the effect of patents on growth is roughly equal to that of having a highly educated workforce.

See the Brookings patenting data broken down by metropolitan area and by state.

Unsurprisingly, patenting activity is concentrated in metropolitan areas, but a small portion of these metro areas are more inventive than others. See Brookings' interactive graphic for a map of patenting rates per metro area. The five most inventive metro areas account for nearly one-third of the metro share of U.S. patents. In addition, residents of these metros are 2.4 times more likely to invent a patent than the average American. All Americans may benefit from the technologies created under such patents, but given the geographical concentration of industries and production, the economic gains from patenting may be similarly concentrated. By lagging the patent rates by 10 years, the authors claim that patents directly contribute to economic growth. They quantify this effect and assert that if the least inventive quartile of metro areas patented as much as those in the top quartile, they could boost their economic growth by 6.5 percent over 10 years or $4,300 per worker over a decade's time.

They are careful to caution that inventing—embodied by patents—must be combined with other pro-growth attributes to generate prosperity. This does well to reduce assessment that their argument is solely for increased patenting activity. The four strongest predictors of patenting in a metro area, as outlined by the authors, was the tech-sector workforce, research universities, research collaboration, and college graduates with degrees in STEM fields. Surprisingly, the presence of national federal labs in a metro area was not associated with more patenting despite controlling for variables like research programs, tech sector employment share and population size; however patents funded by the U.S. government tended to be of a higher quality, as measured by the rate of claims and citations, and federal funding of small business R&D was associated with higher metropolitan productivity growth. Following the data findings, the authors recommend that action is needed from private firms and public policymakers to bolster R&D investment and maximize the U.S. patenting system.

Read the full report here...