Patents – indicators of R&D and innovation

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In the backdrop of patent application surges and a boom in medical patents, a report titled ‘The Means to Compete’ by the Economist Intelligence Unit of The Economist, sheds some light on the relation between patents and innovation, an issue which is generating considerable debate at this time.

..the indicators used in the index—public and private expenditure on R&D, and the generation of patents, royalties and licence fees— provide a good picture of the overall R&D environment and innovation-oriented activity in countries.

Japan, South Korea and Taiwan are clear leaders in this category, and the US, Finland and Sweden are also strong performers. Companies’ prolific patent generation is the primary factor in East Asia’s high R&D index scores. Buoyant private-sector investment in R&D is also an important contributor to this region’s strong innovation environments, as it is in the US and Nordic countries. In the latter, the earning of healthy royalties and licence fees is another reflection of high levels of innovative activity.

While the indicators point to a strong co-relation between patents and innovation, a similar picture is seen throughout the world. As the same report mentions,

East Asian economies are prolific generators of patents, and along with the US they are noteworthy for high levels of private-sector investment in R&D, which is integral to product and service innovation…

The consensus seems clear.

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