IP Plays Central Role in U.S. Economy
Oct 7, 2016
Fast Facts:
· IP-intensive industries accounted for $6.6 trillion in value added in 2014, a 30% increase from 2010
· The share of total U.S. GDP attributable to IP-intensive industries was 38% in 2014, up four points from 2010
· IP-intensive industries directly and indirectly supported 45.5 million jobs, about 30% of all employment
· In 2014, workers in IP-intensive industries earned an average weekly wage 46% higher than those in non-IP-intensive industries
Economists and industry observers have always known intellectual property plays a large role in any economy. Recent studies attempt to quantify exactly how big a role it plays.
The U.S. Government Measures IP
Following a 2012 report from the Department of Commerce titled “Intellectual Property and the U.S. Economy Industries in Focus” the Economics and Statistics Administration and the U.S. Patent and Trademark Office recently released the “Intellectual Property and the U.S. Economy: 2016 Update” complete with new statistical measures.
Intellectual property comes in three forms: Patents, Trademarks and Copyrights. To quantify their economic impact, the researchers first identify IP-intensive industries and differentiate them from non-IP intensive industries. To do this they utilized a number of databases that record IP filings and matched them with associated industries. For example, matching the North American Industry Classification (NAICS) codes to those on patents and trademarks filings, a requirement of the U.S. Patent Classification (USPC) scheme.
After IP intensive industries are identified the researchers then examined their role in the economy: employment, wages, revenue, foreign trade and value added. The 2016 update is more extensive than those in the past and uses narrower definitions for IP-intensive industries, and the results show a stark contrast. There is one caveat: differences between non-IP intensive industries and intensive ones cannot be directly attributed 100% to intellectual property intensity itself. Just like any other field of economic research there are several layers of complexity that cannot be contained in one paper. However, this study and others to come offer special insight into the role of IP protections which otherwise may not come to light. Such as the fact that patent-intensive firms are mostly small businesses in the services and wholesale sector that account for only 1 percent of U.S. firms, but 33 percent of employment.
This report will help policymakers and academics understand the impact IP has on the economy and correctly prescribe economic policy. IP rights matter for two reasons. First, unique creations, brand markings, and novel inventions represent work and those responsible for their coming-into-being should be able to sell, license, and distribute their work however they please and without fear of theft. Secondly, protecting these rights brings confidence to future creators to make the investments of time, capital, and spirit needed to bring in brighter futures