MEHR Seminar: Kerstin Enflo, Lund University, 'Patents and technical change during the Industrial Revolution: A new time series perspective' - CANCELED!
Abstract: We explore the causal link between the sharp increase in patenting activities and the Industrial Revolution in England between 1720 and 1850. There is an ongoing debate about the role of patents and the patents system in driving and explaining growth during this period. To some historians like Nobel laureate Douglass North, the English patent system was an important factor behind the Industrial Revolution whereas others have expressed a more skeptic view, arguing that increases in patenting could simply reflect a general increase in wealth and the propensity to file for patents (MacLeod, 1988). Yet, others have stressed that patents differ greatly in their quality and that one should be extremely cautious in gauging the dynamics of invention by looking at trends in simple patent counts. In fact, to account for varying patent quality, modern economists of innovation weights patents by the number of citations they have received (Jaffe and Trajtenberg, 2002).
We use time series econometrics to determine the causal link between patents and industrial output. Previous research have indicated that patents were essentially a consequence of fast growth in the cotton, iron, and mining sectors, which increased the value of protecting intellectual property (Greasley and Oxley, 2007). We take the analysis further by using quality adjusted patents, using a historical source that so far has been neglected (Nuvolari and Tartari, 2011).
Controlling for quality adjusted patents we find that technical progress embodied in high quality patents drove industrial output during the period 1720 to 1850. In this context, we show that high-quality patents are a better indicator of technical change than simple patent counts. In the wider debate, this result indicate that most technical progress was taking place in few dynamic sectors (textiles, engines, chemicals and metallurgy) where the top quality-adjusted patents were concentrated.