Innovation at country-level: association between economic development and patents

Abstract

This study analyzes the role of economic indicators in country-level innovation, represented by patents in the technology sector. Innovation indicators include the ratio of patents owned by foreign residents and the number of patent applications in each industry in the technology sector. Economic indicators include GDP, gross national income, labor cost, R&D expenditure, real minimum wage, tax revenue, and education enrollment. The data for OECD countries collected from stats.oecd.org for 2000 to 2010 is analyzed using Cognos. Results show that countries with low GDP rely on foreign collaboration for innovation; education enrollment stimulates innovation; among the sectors, government and higher education have higher R&D expenditures than private and non-profit sectors. A significant contribution of our research lies in the dimension of internationalization and ownership of technology innovation. We suggest viable solutions for countries facing tax revenue losses arising from mobility of patents.