The Impact of Institutions on Patent Propensity across Countries

This article offers a novel critique of the impact of institutions on the propensity to patent across countries. Patenting policy is regularly known to carry deep-rooted institutional implications. Yet in the case of developing countries, the United Nations constructed only loose policy concerning the role of the government, the business sector or Multi-National Enterprises in promoting patenting activity. Based on an implicit 'hands off' inclination towards the business sector, this yet uncorroborated policy flatly equates developing countries with advanced ones. More particularly, in the case of the twenty four emerging economies which are spearheading the developing world as hotbeds for meaningful innovation, little thought has thus far been given to the former's institutional particularities in view of promoting patenting as proxy of domestic innovation. This article argues that advanced economies and emerging economies abridging the development divide, in fact diverge over the impact of their government and business sectors in fostering patent propensity. For emerging countries there seems to be a negative relationship between the performance of innovation activity by the business sector and these countries' propensity to patent as proxy for domestic innovation. Equally, for advanced economies there is a negative relationship between the performance of innovation activity by the government and the propensity to patent by these countries. This article ultimately calls for a fundamental policy reexamination of the role of institutions in giving incentives to patenting activity as a proxy for domestic innovation in emerging economies abridging the archetypical North-South divide.