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Report  | April 2010

The Impact of Innovation and the Role of Intellectual Property Rights on U.S. Productivity, Competitiveness, Jobs, Wages, and Exports

By Nam D. Pham, Ph.D.

This report analyzes the economic impacts of innovation and IP protection on the U.S. economy. Findings of the report demonstrate innovation is a crucial driver of competitiveness, growth, and value. Consequently, IP-intensive industries create jobs and spur economic growth as results from high investments in research and development (R&D).

Data of 27 U.S. exportable and importable industries during 2000-07 shows:

(1) IP-intensive industries created highly-skilled jobs during the entire business cycle and low-skilled jobs during the economic downturns while non-IP-intensive industries lost jobs in all levels;

(2) IP-intensive industries paid their highly- and low-skilled employees nearly 60 percent more than non-IP-intensive industries;

(3) Output and sales per employee in IP-intensive industries were more than double that of non-IP-intensive industries;

(4) IP-intensive industries promoted exports and enhance competitiveness;

(5) IP-intensive industries generated trade surplus and therefore reduced U.S. trade deficits;

(6) IP-intensive industries spent almost 13 times the on R&D expenditure per employee that non-IP-intensive industries spent, which directly creates jobs and economic activities in R&D industries as well as in their supporting industries; and,

(7) IP-intensive industries allocated over 2.2 times on capital expenditures per employee that non-IP-intensive industries, did which in turn stimulated jobs and economic activities in the U.S. economy. As such, protecting the intellectual property derived from innovation is essential to the future of a wide range of American industries.