WIPO Report Highlights Importance of Patenting to Improve Tech Capabilities

“From 2001 to 2004, China was only specialized in 16% of all technological capabilities, though that rate increased to 94% of capabilities during the 2017 to 2020 study period.”

WIPO

Source: WIPO report

On May 2, the World Intellectual Property Organization (WIPO) issued its most recent biennial report, entitled “Making Innovation Policy Work for Development,” which analyzes patent filing, scientific publications and economic data across the globe over the last two decades to identify innovation policies effective at diversifying national economies. While WIPO’s report underscores the highly concentrated nature of the global innovation economy, it also highlights several countries that have seen significant improvements in their own technological diversification during the study period.

Changing Global Economic Conditions Require New Industrial Policies for Innovation

According to the WIPO report, many of the industrial policies implemented by national governments since the 1950s have achieved technological diversification based on economic conditions that have changed greatly in the past 20 years. Import substitution and export-led growth policies have seen mixed success, with critics noting that these tactics tend to benefit certain sectors over others without any certainty that a given sector will become as valuable as predicted. While a revival of industrial policy making in the United States and the European Union is too recent to be adequately measured, the WIPO report advocates for policies that harness national science, technology and innovation (STI) systems to foster tech commercialization and better absorb new technologies.

Source: WIPO report

Over the past two decades, a total of eight countries have accounted for 50% of all exports, 60% of all scientific publications, and 80% of all international patenting, according to WIPO. Analyzing innovation outputs, the United States and Japan lead the world with a combined total of 50% of all technology outputs. China also occupies a leading position, accounting for 14% of all science outputs and 10% of production outputs, ranking second for both of those innovation output indicators.

While concentration also exists among innovation outputs across different fields within science, technology and production, WIPO’s policy report found more parity between innovation sectors than country of origin. Assessing outputs from 2017 to 2020 within major domains covering the 626 fields of science, technology and production tracked by WIPO, three of 11 major domains within science account for half of all outputs: chemistry (22%), engineering (16%), and physics and math (14%). Within technology, information and communication technologies (ICT) (18%), biopharmaceuticals (16%), instruments (11%) and engines and transport (8%) were the top four of 14 domains and accounted for half of all scientific publications, international patent applications and exports in the sector. By contrast, the 15 production domains were dominated by machinery and transport equipment (30%) and manufactured goods (21%).

Patenting Boom in China Closes Gap on Technological Capabilities

Technology specialization and diversification are more strongly expressed in high-income economies, but WIPO’s report notes that the economic gap between low-income and high-income countries has been closing slightly since 1990. Still, WIPO’s study of innovation outputs among different nations reflects high-income countries enjoying a much greater degree of technological capability in fields that haven’t been mastered by other countries. For example, while Afghanistan only specializes in two capabilities, both of which are production capabilities (fruits and nuts, spices) that are very common globally, Germany specializes in 500 different capabilities that are specialized by only an average of less than one-eighth of all countries assessed in WIPO’s innovation report.

Source: WIPO report

Overall, nations assessed by WIPO’s report saw their science, technology and production capabilities increase by 5% from 2001-04 to 2017-20. China in particular has seen a major increase in its technological capabilities thanks in large part to a boom of patent filing activity in that country. From 2001 to 2004, China was only specialized in 16% of all technological capabilities, though that rate increased to 94% of capabilities during the 2017 to 2020 study period. Other countries seeing major increases to capabilities include the Republic of Korea, which saw its science and technological capabilities increase from 40% each to 66% and 83%, respectively; and India, which saw scientific specialization increase from 42% to 68% and technology specialization rise from 9% to 21%. While Germany and Japan enjoyed a higher degree of capability specialization during the early study period, both nations experienced reductions in all three sectors by 2020.

Source: WIPO report

Although much of the knowledge represented by scientific publications and international patents can be easily traded across international borders, WIPO’s innovation report acknowledges that much of the innovation infrastructure and knowledge base built by nations diversifying and specializing their technological capabilities is difficult to transfer. The report concluded that nations adopting policies for smart specialization to bridge innovation gaps will better identify constraints on their innovation capabilities.

 

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