Trade in ideas Patenting and productivity in the OECD

TLDR

The study develops a growth and technology diffusion model fitted to OECD aggregate data. The model is estimated to explain international productivity and patenting patterns. The model predicts equal long‑term growth rates across countries, with relative productivity driven by adoption of inventions, and shows that over half of each country’s growth stems from innovation in the US, Germany, and Japan.

Abstract

We develop a model of growth and technology diffusion which we fit to aggregate data from OECD countries. Our model implies that each country will eventually grow at the same rate, with its relative productivity determined by its ability to adopt new inventions. Hence productivity levels rather than growth rates better reflect a country's ability to innovate or to adopt new technology. We estimate the model to explain international patterns of productivity and patenting. We find that more than 50% of the growth in each country in our sample derives from innovation in the United States, Germany, and Japan.