The Elasticity of Patent Activities with Respect to R&D-performing Sectors: an Empirical Study on High-Income OECD Countries

This study examines the impact of R&D performing sectors, business, higher education, and government, on patent activities in 14 high income OECD countries using dynamic panel data model. In addition, the paper investigates the international technology spillover between OECD countries under investigation. The findings suggest that only business R&D is found to have a positive and significant contemporaneous impact on patent activities in all different measures of patents. On the other hand, the elasticity of patent activities with respect to higher education shows a significant response of patenting only to lagged higher education R&D, while the response of patents to current and lagged government R&D is found to be insignificant. In general, the elasticity of patent activities to R&D expenditure is found to be low (inelastic) in most of the specifications. Finally, the technology spillover effect, which is measured by the technology balance of payment ratio and total OECD R&D, shows that countries with higher technology exports rate realise an increase in their patent activities. In addition, the total OECD expenditure on R&D is found to have a positive and significant, but economically weak, impact on domestic patent activities.