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Why We Need to Stop Relying On Patents to Measure Innovation

The key to a nation's long-run economic growth is the effect of innovation on productivity, and has little to do with patent activity

Patent databases may be a smoke screen that hides the true issues, problems, and dynamics of innovation behind the illusion that innovation is booming—and that patent activity measures the boom.  We are said to live in a time of remarkable innovation, with the computer/information revolution often compared to the Industrial Revolution in allowing people to produce more while working less. Economists, consultants, and other business gurus are striving mightily to quantify this revolution and to understand its sources and implications. One popular metric is the number of new patents issued each year. For example, the pace of innovation might be gauged by the fact that there were 669,434 US patent applications and 390,499 new patents awarded in 2019, each triple the…