Innovation and Economic Growth in China - Evidence from Patent Statistics

Masterarbeit , 2010 , 68 Seiten , Note: 1.7

VWL - Konjunktur und Wachstum

China has demonstrated an enormously high rate of economic growth over a period of more than twenty years. In fact, China’s economy advances to a driving force in order to overcome the consequences of the financial crisis in 2008. This is only one reason why China has become the major object for studying economic growth as shown by thousands of publications and articles. But up to now, there have been published only few papers dealing with China’s
patenting activities. This is astonishing, given the fact that innovations expressed by patent counts are one of the key factors that drives long term growth and productivity.
Today emerging state’s economies like in China turn more and more into knowledge-based economies, where intellectual property rights play an elementary role. Moreover, IP protection
in form of patents can increase (as intangible asset) firm’s values. Furthermore, investment decisions are sufficiently influenced by the existence of a reliable patent system. While intellectual property and its protection have an essential impact on creating economic growth, the neglect of this relationship has much more negative influence on economy’s development. If an invention can be costless copied by a competitor it would be impossible to cover
the costs of the development or even to gain a profit out of it. Therefore, it is necessary to think about efficient incentive systems for inventors in order to reward their efforts. Unfortunately, it proves difficult to establish a patent system that maximises social welfare by providing just enough incentives to invent, while limiting the temporary monopoly given to the patentee.
In general, strong patents (patent length, breadth and height) can encourage innovations but too strong patents could be contrary by reducing welfare. Given China’s weak record of protecting intellectual property rights on the one hand and its
economic growth on the other hand, there seems to be a contradiction. But, a closer look reveals China’s efforts for installing an efficient patent system. For example, after passing its
first Patent Law in 1986, China has amended its Patent Law several times in order to bring it in line with international norms, as well as to support its effort to enter the WTO in 2001.
However, China’s enforcement system is still weak. The installation of China’s patent system goes along with an incredible patent surge at annual growth rates of 20%.

Inhaltsverzeichnis (Table of Contents)

• Executive summary
• Introduction
• Purpose of the thesis
• Method
• Structure
• Patent System
• Overview
• Regional and national patent systems
• European patent system
• Chinese patent system
• Global patent system under PCT
• Basic grant procedures
• Economics of Patents
• Function of the patent system
• Innovation incentives vs. social welfare
• Innovation models
• Growth theory
• Introduction
• Endogenous Growth models
• Research and development models
• Human capital models
• Critics
• Conclusions from endogenous growth models
• Preliminary conclusion
• Descriptive statistics
• Methodological background
• General trends in patenting
• Trends in patenting at the SIPO
• Hypotheses about China's upsurge in patent counts
• Hypothesis 1: R&D expenditures cause jump in patent counts
• Hypothesis 2: Amendments in China's patent laws
• Hypothesis 3: FDI has caused the rising number of patents in China
• Hypothesis 4: Increased patent production of state-owned institutions due to an improved educative sector
• Preliminary conclusion
• Patenting and economic growth in China
• Quality of Chinese patenting activities
• Conclusion

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This thesis aims to demonstrate how China generates its high and stable economic growth rates by analyzing patent statistics. Based on the endogenous growth theory, the author identifies fields of action that contribute to China's rising patent activities.

• The role of patent statistics in understanding economic growth in China
• The impact of research and development efforts on China's patent activities
• The influence of foreign direct investment (FDI) on innovation in China
• The importance of an innovation-friendly policy environment in China
• The relationship between patenting and economic growth in China

Zusammenfassung der Kapitel (Chapter Summaries)

The introduction outlines the purpose, method, and structure of the thesis. Chapter 2 provides an overview of the patent system, encompassing regional, national, and global perspectives, including the European patent system, the Chinese patent system, the global patent system under PCT, and basic grant procedures. Chapter 3 delves into the economics of patents, exploring the function of the patent system, the tension between innovation incentives and social welfare, and different innovation models. Chapter 4 focuses on growth theory, specifically endogenous growth models, examining research and development models, human capital models, critiques of these models, and conclusions drawn from them. Chapter 5 presents descriptive statistics, including methodological background, general trends in patenting, trends in patenting at the SIPO, and hypotheses about China's upsurge in patent counts. This chapter explores the relationship between R&D expenditures, amendments in China's patent laws, FDI, and the increased patent production of state-owned institutions. The chapter concludes with a preliminary conclusion on patenting and economic growth in China. Chapter 6 examines the quality of Chinese patenting activities, and the conclusion synthesizes the key findings of the thesis.

Schlüsselwörter (Keywords)

The key themes of this thesis include innovation, economic growth, patent statistics, endogenous growth theory, research and development (R&D), foreign direct investment (FDI), innovation-friendly policy environment, and the relationship between patenting and economic growth. These concepts are explored in the context of China's rapid economic development and its evolving patent system.

• Hochschule: FOM Essen, Hochschule für Oekonomie & Management gemeinnützige GmbH, Hochschulleitung Essen früher Fachhochschule
• Note: 1.7
• Autor: Sebastian Harder (Autor:in)
• Erscheinungsjahr: 2010
• Seiten: 68
• Katalognummer: V156344
• ISBN (eBook): 9783640694136
• ISBN (Buch): 9783640695331
• Sprache: Englisch
• Schlagworte: Patents, China, Economic growth, innovation