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Knowledge Production and Economic Development: Empirical Evidences

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Abstract

This paper throws some light on the relationship between domestic knowledge production and economic development for a group of countries in different periods of time. In particular, this article presents a statistical analysis using the Qualitative Comparative Analysis (QCA) method and corroborates that there is a strong relationship between economic development and the domestic capacity to produce new knowledge. We use as a proxy for domestic knowledge production the patent application by residents and the metric of income level used was the GDP per capita. We show that an increase in the stock of knowledge produced by residents is an important policy to generate income in an economic system once residents are able to appropriate the gains for the use of this new knowledge. Accordingly, there is a dual effect: Knowledge stock growth has a positive impact on GDP, and GDP growth leads to increases in resources to be used for new knowledge generation. In times of global value chains and capital mobility, incentivizing creative imitation, absorption, and production of new knowledge seems to be a valid strategy for less industrialized countries.

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Notes

  1. Residents’ Patent applications can then be used as a proxy of the level of technological competence of a country but also the level of domestic knowledge that is appropriated by residents.

  2. According to Borrás and Edquist (2015, p. 4), individual competences—“acquisition of information, knowledge, understanding, and skills by individual people, trough participation in some form of education and training, whether formal (for example in educational institutes) or informal (for example competence building (‘learning-by-doing’) in the workplace)”—are also important for innovation.

  3. “How technology evolves” is the central question in technology (…). Without evolution—without a sense of common relatedness—technologies seem to be born independently and improve independently. Each must come from some unexplained mental process, some form of “creativity” or “thinking outside the box” that brings it into existence and separately develops it. With evolution (…), new technologies would be birthed in some precise way from previous ones, albeit with considerable mental midwifing, and develop through some understood process of adaptation. In other words, if we could understand evolution, we could understand that most mysterious of processes: innovation” (Arthur 2011, p. 15).

  4. For an assessment on Science and Technology metrics, see Geisler (2000). For a critique on the use of patents as an economic indicator, see Desrochers (1998).

  5. It is worth mentioning that a patent entitles an eligible right used to defend (by legal protection) competitive advantages of successful innovative companies, it does not constitute, necessary or sufficient condition to ensure the success of innovation or favorable appropriability. The establishment of a legal monopoly does not automatically translate into an effective economic monopoly position (Possas and Mello 2009). Therefore, a patent per se does not guarantee ex ante that there will be an economic monopoly position for the owner of the patent. It will depend obviously of its relevance to the productive sector and if it can be applied in production affecting the costs and/or differentiating products. What is important to mention is that having a patent does not mean the company has innovated or will ever innovate. According to Dressler (2012), due to the lack of a sufficient economic theory of patents, an assessment of the economic effects of patents cannot be conclusive, thus, any economic justification of a patent system is biased.

  6. For a further analysis about the Brazilian case compared to the South Korean, please see Romero et al. (2015).

  7. Patent application (or deposit) is a request pending at national intellectual property office for the grant of a patent for the invention described and claimed by that deposit. Prior to publication (generally patents are published at about 18 months after the earliest priority date of the application), the application is confidential to the national intellectual property office. After publication, depending on each office rules, certain parts of the application file may remain confidential. The publication of a patent application marks the date at which it becomes publicly available. Once the patent application complies with the requirements of each national intellectual property office, the patent will be granted/issued/registered.

  8. Information available at <www.managingip.com/Article/3501851/Brazils-battle-against-the-patent-backlog.html>

  9. Despite the usual understanding about patent (proxy for knowledge production) defining economic development, some studies show that the increase on trade liberalization and FDI tends to establish a realignment between good production in developing countries and knowledge production in developed ones (LAI 2007; Branstetter et al. 2007). On these results rest out the additional hypothesis of a new causality direction from economic development to the capability of generating domestic knowledge. The findings in this paper are not conclusive to answer these questions.

  10. Innovations systems are classified as Albuquerque (1999) in a mature and immature tipology.

  11. They were not observed here the distinct combinations for infrastructure, open trade and financial system.

  12. The USA, Germany, Canada, France, Italy, Japan and the UK.

  13. Many studies corroborate this point such as Kim (1997) and Laplane and Ferreira (2013).

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The opinions expressed herein are those of only the authors. They do not necessarily reflect the views of, or involve any responsibility for, the institutions to which they are affiliated. Any errors are the fault of the authors.

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Authors and Affiliations

  1. Aeronautics Institute of Technology, Praça Marechal Eduardo Gomes, 50, Vila das Acácias, São José dos Campos, 12228-900, Sao Paulo, Brazil

    Thiago Caliari

  2. National Institute of Technology, Instituto Nacional de Tecnologia (INT), Av. Venezuela 82 - Praça Mauá, Rio de Janeiro, 20081-312, Rio de Janeiro, Brazil

    Tulio Chiarini

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Caliari, T., Chiarini, T. Knowledge Production and Economic Development: Empirical Evidences. J Knowl Econ 12, 1–22 (2021). https://doi.org/10.1007/s13132-016-0435-z

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