Patent policy and economic growth: A survey

Abstract

This survey provides a selective review of the literature on patent policy, innovation and economic growth. The patent system is a useful policy tool for stimulating innovation given its importance on technological progress and economic growth. However, the patent system is a multidimensional system, which features multiple patent policy instruments. In this survey, we review some of the commonly discussed patent policy instruments, such as patent length, patent breadth and blocking patents, and also use a canonical Schumpeterian growth model to demonstrate their different effects on innovation and the macroeconomy.

Patent protection, externalities, and income inequality

“…1.1 | Literature review Aghion and Howitt (1992) develop a Schumpeter growth model and elaborate that technological progress is reflected in the improvement of intermediate goods' quality. Subsequent papers, such as Chu (2010), Chu and Cozzi (2018), Chu et al (2021), andChu (2022), explore the effect of patent policy on growth rate and income inequality via the Schumpeter growth model. Chu (2010) and Chu and Cozzi (2018) find positive effects of patent breadth on growth and income inequality.…”

“…Chu (2010) and Chu and Cozzi (2018) find positive effects of patent breadth on growth and income inequality. Chu (2022) systematically reviews the literature on the impact of patent policy on innovation and growth, 3 concluding that extending patent length beyond 20 years is ineffective in stimulating R&D. On the other hand, increasing patent breadth may boost innovation and economic growth, but it could potentially exacerbate income inequality. Chu et al (2021) extend the Schumpeterian growth model with an endogenous market structure, showing when the number of differentiated products is exogenous (in the short run) that intensive patent protection positively impacts economic growth and has a positive or inverted U-shape impact on income inequality.…”

“…Adams (2008) examines the degree of income inequality in 62 developing countries over a period of 17 years, offering results whereby strengthening intellectual property rights positively correlates with income inequality. Bhattacharya et al (2022) take the 2002 Indian Patent 3 Chu (2022) summarizes that patent policy instruments include patent length, patent breadth, and blocking patents. Detailed definitions of patent length, patent breadth, and blocking patents appear in Chu (2022) with definitions also available in Chu (2009).…”

“…Bhattacharya et al (2022) take the 2002 Indian Patent 3 Chu (2022) summarizes that patent policy instruments include patent length, patent breadth, and blocking patents. Detailed definitions of patent length, patent breadth, and blocking patents appear in Chu (2022) with definitions also available in Chu (2009).…”

“…Subsequent papers, such as Chu (2010), Chu and Cozzi (2018), Chu et al. (2021), and Chu (2022), explore the effect of patent policy on growth rate and income inequality via the Schumpeter growth model. Chu (2010) and Chu and Cozzi (2018) find positive effects of patent breadth on growth and income inequality.…”