A comprehensive study just released by the Brookings Institution Metropolitan Policy Program analyzed the role of patents in economic development, especially in large metropolitan areas. The study concluded that patenting activity is strongly correlated with increased economic development:
Inventions, embodied in patents, are a major driver of long-term regional economic performance, especially if the patents are of higher quality. In recent decades, patenting is associated with higher productivity growth, lower unemployment rates, and the creation of more publicly-traded companies. The effect of patents on growth is roughly equal to that of having a highly educated workforce. A low-patenting metro area could gain $4,300 more per worker over a decade’s time, if it became a high-patenting metro area.
The study found that Detroit was in the top tier of areas with robust patenting activity, ranking tenth nationally in average patents per year (2,720 annually between 2007 and 2012) and patents per one million residents (621). The study also finds that the “rate of patenting by U.S. inventors is at its highest point since the Industrial Revolution. Moreover, patents are of objectively higher value now than in the recent past and more evenly dispersed among owners than in previous decades.” The study is a very impressive rebuttal of frequent criticism that patents stifle, rather than promote, innovation across most industries. The full report, titled “Patenting Prosperity:Invention and Economic Performance in the United States and its Metropolitan Areas” is available HERE. It’s well worth a look.