Abstract
There has been surprisingly little empirical study about the effect of patent laws per se on economic growth. Using a historical panel data of the US and 14 Western European countries during 1600-1913, we estimate a significant positive effect of patent laws on economic growth in different specifications of fixed effects, random effects, time effects, dynamic panel GMM and differences-in-differences models. The results are robust to inclusion of “constraint on executive”, exclusion of the UK and US, and using urbanization ratio as a proxy for GDP per capita.
Highlights
Many economists have argued that property-rights institutions are fundamental causes of long-run economic growth [1,2,3]
We focus on the effect of a particular property rights institution – patent laws, on economic growth
The patent law dummy is often significant at 1% level and at least at 5% level, with a positive sign that is economically significant
Summary
Many economists have argued that property-rights institutions are fundamental causes of long-run economic growth [1,2,3]. Empirical studies are often plagued by issues of endogeneity and omitted variables bias. We focus on the effect of a particular property rights institution – patent laws, on economic growth. The debate over the effect of patent laws on economic growth is old. This controversy reached such a height during 1850-1875 that the Netherlands repealed its patent law in 1869, which was not reinstated until 1912 [4]. Boldrin and Levine [5] advocates abolishing patent laws
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