Patent Tigers: The New Geography of Global Innovation
It is often argued that the patent system stands in tension with growth and innovation in developing countries. This article identifies a notable exception. In the case of at least three emerging markets, extensive use of the U.S. patent system appears to have supported innovation and been accompanied by significant movement up the growth ladder. Within a few decades, Israel, Korea, and Taiwan have invested heavily in cultivating a rich stock of human and intellectual capital and obtaining USPTO patents to extract a return from those investments. The result is impressive: as of 2015, these relatively small countries are (together with Japan) the most intensive foreign users of the U.S. patent system on a per capita and per GDP basis. Although further empirical inquiry is warranted, the result does not seem accidental. Existing theory and empirics support the view that patents are especially valuable as entry tools for smaller R&D-intensive firms that lack the capital and expertise to establish the production and distribution infrastructure required to execute the commercialization process. The “patent tigers” phenomenon suggests that this effect extends from the firm level to the country level. Jurisdictions with rich intellectual capital but limited domestic markets can extract returns from R&D investments through transactions with third parties that facilitate the pathway to larger foreign markets. The property rights umbrella supplied by the U.S. patent system provides a critical tool to achieve that objective.
Jonathan M. Barnett, Patent Tigers: The New Geography of Global Innovation, 2 Criterion J. on Innovation 429 (2017).