1. JRC IPTS - Sevilla, 14 May 2009 1 The Internationalization of Inventive Activity: A Gravity Model Using Patent Data Lucio Picci IS & Growth Action, IS Unit Institute for Prospective Technological Studies The Output of R&D activities: Harnessing the Power of Patents Data Sevilla, 14-15 May 2009

2. JRC IPTS - Sevilla, 14 May 2009 2 IPTS : Part of DG JRC of the EC: 7 Research Institutes across Europe Mission : “to provide customer- driven support to the EU policy- making process by researching science-based responses to policy challenges that have both a socio- economic as well as a scientific/technological dimension” Institute for Prospective Technological Studies Modus operandi: desk research, expert groups, modelling, centres of expertise,…

3. JRC IPTS - Sevilla, 14 May 2009 3 The problem “Despite being a critical resource in the global competition and performance of both companies and countries […] the production of technology remains far from globalised." Patel and Pavitt, 1991 Questions: To what extent are Patel and Pavitt still right? What factors encourages/impedes the internationalization of R&D?

4. JRC IPTS - Sevilla, 14 May 2009 4 Patent statistics Firms patent portfolios: Use business directories to find info on subsidiaries ex: Patel and Vega, 1991, and Bas and Serra, 2002 Country patent portfolios Use info on residence of applicant(s)/inventor(s) “National” patents: all inventors and applicants are from the same country “International” patents: contrast of nationality among inventor/applicants Behind an “international patent” there may be different stories

5. JRC IPTS - Sevilla, 14 May 2009 5 Our choice We use country patent portfolios Pros: you get the “whole picture” Cons: it is virtually impossible to recover info at the firm level Only antecedent to our study: Guellec & van Pottelsberghe de la Potterie, Research Policy, 2001

6. JRC IPTS - Sevilla, 14 May 2009 6 Our measures of internationalization Measures of internationalization: “Inventor int.”: “Applicant int.”: “Inventor-Applicant int.”: These measures will be the dep. variable in the econometric analysis They can be expressed in relative terms

7. JRC IPTS - Sevilla, 14 May 2009 7 The data Method: De Rassenfose’s presentation Patstat, priority filings, EU + USPTO Results that follow: no USPTO, pre-revision

8. JRC IPTS - Sevilla, 14 May 2009 8 R&D is increasingly globalized Source: our analysis of the Patstat DB. Priority applications, EU27

9. JRC IPTS - Sevilla, 14 May 2009 9 Gravity Models - 1 Gravity models in international trade: Empirically very successful Trade between two countries: increasing in their economic size, decreasing in their distance Meta analysis (Disdier and Head, 2008): elasticity to distance = 0.9, increasing after 1950 Other variables that count (for trade): common border, language, market, currency (“Rose effect”)

10. JRC IPTS - Sevilla, 14 May 2009 10 Gravity Models - 1 Distance also counts in: Service trade, Knowledge flows (patent citations), immigration flows, and E-commerce! Our choice: We use a gravity model to explain the internationalization (country by country measures) of inventive activities

11. JRC IPTS - Sevilla, 14 May 2009 11 Our model Country and year dummies are present OLS (but, beware of the zeros!) Heckit (Heckman, 1979) estimator (to take care of the many zeros) Sample: full, and limited to EU countries

12. JRC IPTS - Sevilla, 14 May 2009 12 The results (a selection) Dep var: ln( Dep var ln( AllEU25AllEU25AllEU25 INVINVAPPAPPINVAPP ln(agginv_x).3180 0.000.1800 0.005.2502 0.000.1203 0.150.2394 0.000.2110 0.008 ln(agginv_y).3180 0.000.1800 0.005.2502 0.000.1203 0.150.2851 0.000.4135 0.000 ln(dist)-.3148 0.000 -.2419 0.000 -.2238 0.000.0528 0.542 -.4674 0.000 -.2935 0.001 ln(dist)*time-.0077 0.016 -.0265 0.000.0047 0.223 -.0254 0.001 -.0074 0.064 -.0279 0.000 border.9557 0.000.7026 0.000.6871 0.000.6077 0.000.6830 0.000.5490 0.000 language1.1681 0.000 1.5748 0.000 1.164 0.000 1.3676 0.000 1.2212 0.000 1.4158 0.000 EU Union.2535 0.000.4552 0.000 -.0687 0.337.1343 0.142.0702 0.304.5060 0.000 Euro Zone.0151 0.800.1548 0.015.1571 0.029.4306 0.000 -.1740 0.019 -.1160 0.150 Techproximity.1579 0.046.3689 0.000.2304 0.050.3290 0.028.4561 0.000.7562 0.000 n427627262146132839582448 R2R2 0.65340.67920.5430.58050.61570.5805.5470.5155.8229.7297.7831.797 Heckit estimator P-values below estimated coefficients Bold: significant at 10% level or less

13. JRC IPTS - Sevilla, 14 May 2009 13 Discussion Distance matters, but less than in trade Importance of distance increases in time (as is for trade!) Tentative explanation: Physical distance proxies for “cultural distance”. As other impeding factors decrease their absolute impact, the relative impact of distance increases

14. JRC IPTS - Sevilla, 14 May 2009 14 Discussion Sharing a common language, border, market, increases internationalization of R&D Euro Zone: positive effect on INV, APP & negative on INVAPP internat. A puzzle? Tentative explanation: R&D labs abroad also may serve “non technological” reasons (such as, so called “PR&D” labs”) Beyond a certain level of integration, it is less necessary to set up labs abroad for “non-technological” reasons.

15. JRC IPTS - Sevilla, 14 May 2009 15 thank you lucio.picci@ec.europa.eu