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Lecture 5 - Indicators of innovation and technological change: R&D and patents


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Lecture 5 - Indicators of innovation and technological change: R&D and patents

  1. 1. Science-, Technology and Innovation Indicators Merit course – 2006 Productivity (growth accounting & total factor productivity) Research and Development (R&D) Patents & patent citations Bibliometrics (publications & citations) Innovation surveys
  2. 2. Total factor productivity “The economist’s answer to measuring the impact of science and technology” An indirect way Links innovation to it’s most important impact: the increase in the standard of living
  3. 3. Growth accounting Tinbergen/Abramovitz/Solow: dQ dA dK dL f A fK A fL . dt dt dt dt A fK K A fL L ˆˆ ˆ ˆ QA K L. Q Q ˆˆ ˆ ˆ AQ L K. L K Figure 6. Substitution and technological change in the production function A measure of technological change or a measure of our ignorance?
  4. 4. Growth accounting results (Solow)
  5. 5. TFP growth for the Netherlands, 1921- 2002 150 140 130 120 110 100 90 80 1920 1940 1960 1980 2000
  6. 6. Research and Development (R&D) Defined strictly in the Frascati Manual (OECD) – This defines R&D as the development of new knowledge and new practical applications of knowledge (research such as exploration of new oil fields is excluded) – Provides a practical manual for collection R&D statistics, e.g. categories of R&D performers, R&D funders, R&D categories, etc. – R&D data systematically available since early 1960s
  7. 7. Endogenous technological change – R&D Non-military R&D as Total R&D as a % of R&D researchers as a % R&D financed by a % of GDP GDP % of total employment businesses 3.5 3.5 11 75 10 3.0 3.0 70 9 2.5 2.5 65 8 7 2.0 2.0 60 6 1.5 1.5 55 5 4 1.0 1.0 50 EU EU OECD US EU OECD US OECD EU Japan US OECD Japan US Japan Japan Q AR K 1 L ,
  8. 8. BERD and productivity Country α ρ France 0.860 (0.000) -0.031 (0.273) United Kingdom 0.421 (0.023) 0.395 (0.067) Japan 0.478 (0.000) 0.155 (0.000) United States 0.521 (0.000) 0.237 (0.000) Table 1. Estimations results for the equation including business R&D as a production factor, 1959 - 1999. 2.50 2.00 1.50 1.00 0.50 0.00 1950 1960 1970 1980 1990 2000 2010 France United Kingdom Japan United States
  9. 9. Patents Output indicator Counts of patents are a raw indicator: they do not provide any information about the commercial use or value (many patents are never used) The propensity to patent innovations differs greatly between sectors (e.g., pharmaceuticals high, aerospace low) Patent counts sensitive to bureaucracy at the patent office
  10. 10. International patenting Patents in large international markets are considered the best indicators (USPTO, EPO) But these are influenced by the home country bias A solution is to look at “Triad patents” (patents applied for in EU-US-JP), or, more generally, at patent equivalents in the various systems (OECD database) – Based on priority numbers
  11. 11. Specialization indicators Take the share of a country in a sector (1) Take the share of the country in total (2) Divide (1) by (2) This is an indicator of specialization (<1 or >1) But it is asymmetric: negative specialization in [0,1], positive specialization in [1, ∞] – Solution: take ln() – Solution: (X+1)/(X-1)
  12. 12. Patent citations Patents cite other patents (and non-patent literature) This may be taken as indicator of technological relatedness, or even technology spillovers – Used to measure international spillovers, or the geographical concentration of spillovers But remember that patent citations are a legal instrument, aimed at excluding patentable knowledge
  13. 13. The bureaucratic factor 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 1980 1985 1990 1995 2000 2005 citations to patents citations to non-patent literature
  14. 14. Bibliometrics – measuring science Counting publications – Based on available databases, which have particular biases towards specific fields of science, and towards publications in English Citations as a measure of “visibility” or quality Do scientific publications contribute to a “world stock” of knowledge or to “national stocks”? Cooperation: co-publishing Networks of knowledge flows: citations
  15. 15. Innovation indicators Emerged out of the fear that R&D indicators provide a limited picture of innovation – R&D is an input, and there might be differences in efficiency of turning inputs into outputs – Innovation is a broader process than just R&D (chain-linked model) Community Innovation Survey (CIS) in Europe: a panel of innovation data Now also innovation surveys outside Europe (e.g., Brazil, South Africa)
  16. 16. Measuring Innovation and Innovation expenditures Did your enterprise have any – Product innovations new to the firm? – Product innovations new to the market? – Process innovations – Service innovations List expenditure in the following catagories: – R&D – New machinery and equipment – Acquisition of external technology – Design of new products – Training related to innovation – Marketing of new products
  17. 17. Distribution of sales Share of total sales of – Unchanged products – Slightly improved products – Product innovations (new to the firm, new to the market)
  18. 18. The process of innovation Importance of knowledge sources – E.g., universities, clients, suppliers, competitors, PROs Problems related to innovation – Etc. finance, regulations, etc.