The effects of patenting on regional economic activity: Are patents engines of economic growth?

Patents have been shown largely in country-level analyses to be associated with higher levels of real GDP. This current endeavor focuses on the U.S. county level and tests whether having more patents is associated with higher real GDP, while controlling for other important factors such as labor (employed persons), median income and demographic factors such as racial composition. and educational attainment. Using a 13-year panel data set (2010–2022) for U.S. counties, the authors find a consistent, positive “patents effect” on real GDP, with a slightly stronger positive relationship for three- and five-year lagged patent counts, compared to ten-year lags, suggesting that the effect on real GDP may diminish with time. A similarly-positive effect on real GDP is identified using the total stock of patents variable, measured as a twenty-year running sum. This analysis has important policy implications, such as providing support for tax incentives or subsidies to attract patent-producing companies as a means of stimulating regional economic growth.