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

April 2010  |  Contributors: Nam D. Pham, Ph.D.

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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 mmore 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.