Patenting Prosperity: Invention and Economic Performance in the United States and its Metropolitan Areas

From the online overview:

This report examines the importance of patents as a measure of invention to economic growth and explores why some areas are more inventive than others. Why should we expect there to be a relationship between patenting and urban economic development? As economist Paul Romer has written, the defining nature of ideas, in contrast to other economic goods, is that they are non-rival: their use by any one individual does not preclude others from using them. Although useful ideas can be freely transmitted and copied, the patent system guarantees, in principle, temporary protection from would-be competitors in the marketplace (i.e. excludability). Thus, one would expect regions to realize at least some of the value of invention, as has been shown for individual inventors and companies that patent. Yet there is no guarantee that patents generated in a specific location will generate wealth in that same location—a set of conditions (the presence of a skilled and diverse labor force, an “ecosystem” of businesses providing complementary goods and services, financing and marketing capabilities among them) have to be met for invention to be commercialized. Research has established that patents are correlated with economic growth across and within the same country over time.

Source: Brookings Institution
Authors: Jonathan Rothwell, José Lobo, Deborah Strumsky and Mark Muro

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