The domestic patent application and international technological innovation in an open economy: promotion or substitution?

Abstract

ABSTRACT The purpose of this study is to explore the relationship between the domestic patent application and international technology innovation in an open economy. Using the panel data of Asia-Pacific countries, this paper empirically analyzes the effect of economic openness level on international technological innovation and the moderating mechanism of the domestic patent application on them. The results show that the promotion effect of economic openness level on international technological innovation is different in countries with different income levels. With the increase of Foreign Direct Investment (FDI), the domestic patent application displays a promotion effect on Patent Cooperation Treaty (PCT) application. Due to the improvement of intellectual property protection in middle-high-income countries, more and more foreign investors are attracted to invest in those countries and then learn from the new technologies brought by foreign capital. The technology spillover effect of FDI is more obvious in middle-high-income countries. With the increase of Outward Foreign Direct Investment (OFDI), the domestic patent application can promote PCT application in high-income and middle-high-income countries. But there is no evidence that domestic patent application positively or negatively moderates the relationship between OFDI and international technological innovation in middle-low-income countries.