The effect of infrastructure on invention: Innovative capacity and the dynamics of public construction investment

Abstract

The association between public infrastructural investment and invention is explored in this study, analyzing expenditure and patenting trends and cycles over much of the 20th century. First, innovative capacity, an endogenous indicator of US innovation potential based on invention patent output, is conceptualized and discussed. A major shift in invention modes is shown to have occured over seven decades (1920–1989) as corporate, rather than individual, invention became the most important national source of innovative capacity. The support of public infrastructure for invention is then analyzed, considering its most important characteristics and supportive functions, and its expenditure patterns over seven decades. The analysis of the infrastructural investment and the innovative capacity age cycle dynamics reveals a remarkable association between educational infrastructure construction and both aggregate and corporate innovative capacity. Time-series statistical analyses provide further insights on the effects of infrastructural investment on invention, showing that corporate patenting tends to benefit more from public infrastructural construction and that educational infrastructure expenditures provide a stronger association with both aggregate and corporate inventive performance.