Conclusion

• DOI: https://doi.org/10.1108/S0573-8555(2005)0000272010
• Published date: 21 May 2005
• Pages: 193-194
• Date: 21 May 2005
• Author: M. McAleer,Daniel Slottje,Pei Syn Wee

CHAPTER 6

Conclusion

This book analyzed the impact of patent activity variables (as proxies

for innovation)

on

technical

change across 35 industries in the

USA for

the period 1958-1996. An aggregate production function of the

generalized Fechner-Thurstone (GFT) form, with the flexibility to

examine the impact of

the

various types of

patent

activity on techno-

logy, was

estimated.

A technology changer

was

defined

as a

parameter

that has an impact on the elasticity of the marginal rate of technical

substitution (MRTS) between inputs of the

GFT

production function.

Four types of patent activity in the US for the years 1958-1996,

namely, total patent applications, total patents granted, unsuccessful

patent applications and foreign patents granted, were chosen as

instruments

for the

technology

changer.

Using

the GFT

specification,

the impacts of alternative technology changers

on the

elasticity of the

MRTS

between

various

factors of production

were

estimated directly.

At the aggregate level, it was found that all four types of patent

activity had significant impacts on the rates at which various inputs

were substituted in production for each other over time, though to

differing degrees. Foreign patents granted were found to have the

largest impact on the various elasticities of MRTS between inputs,

and so

may

be

considered

the most

effective technology

changer.

This

result may have important implications for the competitiveness of

innovation

in

domestic

US

firms.

Total patent applications

are

ranked

second in their effectiveness as technology changers, followed by

total patents granted and unsuccessful patent applications.