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Report  | March 2015

IP-Intensive Manufacturing Industries: Driving U.S. Economic Growth

By Nam D. Pham, Ph.D.

Innovation is paramount to long-term sustainable economic growth. Companies that engage in higher rates of R&D investment are more capable of bringing new products and services to market, thus ensuring higher growth rates. These companies, in turn, are able to offer high-skill, high-wage employment in STEM fields and contribute to the overall economic status. 

IP-intensive manufacturing industries, defined as those that invest at an above-average rate of R&D per employee, are key drivers of economic prosperity in the U.S. economy. Through both economic upturns and downturns, IP-intensive industries have outperformed non-IP-intensive industries by all key economic measures over the past 15 years, including wages paid, exports, value-added, and gross output per employee. The out-performance of IP-intensive industries owes much to the return of investment in R&D and human capital. These industries spur technological innovation which directly lead to stronger growth for the U.S. economy.