New report highlights importance of IP-intensive manufacturing industries to the U.S. economy

A new report from NDP Analytics showcases how innovation is the lifeblood of economic growth in the United States and that intellectual property (IP) protections are a crucial driver for high rates of sustained national development. NDP’s research showed a close correlation between IP, research and development (R&D) and innovation, directly leading to economic growth.

Notably, the report highlights that “countries with higher level of patenting (those registering for more patents) tend to experience higher rates of economic growth and that growth accelerates over time as patenting activity increases.” The report shows that IP-intensive industries in the U.S. such as pharmaceuticals, communications technology and aerospace make outsized contributions to overall U.S. economic performance. And among IP-intensive industries, pharmaceutical economic performance surpassed even that of its peers.

The close association of IP and R&D to positive economic results should be of the utmost interest to policymakers concerned about sustaining and growing the U.S. economy. It also demonstrates the degree of harm that reducing or eliminating IP protections would cause for millions of Americans.

Below are three key takeaways from NDP’s report.

IP-intensive industries invest heavily in R&D.

• IP-intensive manufacturing industries account for over 83% of manufacturing R&D investment in the U.S., five times greater than that of non-IP-intensive industries.
• R&D investment per employee in IP-intensive manufacturing industries averaged more than 12 times that of non-IP-intensive manufacturing industries.

Due to outsized R&D investment, IP-intensive industries outperformed non-IP-intensive industries across multiple key economic measures from 2008 to 2019.

• Real output of IP-intensive industries grew by 18.9% while that for non-IP-intensive industries declined by 0.6%.
• Wages in IP-intensive manufacturing industries are more than 45% higher than those in non-IP-intensive manufacturing industries.
• IP-intensive industries also exhibit higher levels of GDP contributions and exports than non-IP-intensive industries, and IP-intensive industries are more resilient in times of economic contraction or distress.

The economic growth generated by IP-intensive industries is made possible by robust IP protections.

• Economic studies show that countries with higher levels of IP generation, such as through patenting activity, tend to experience higher rates of economic growth.
• Three quarters of U.S. economic growth since WWII is attributable to technological innovations, thanks to the healthy innovation environment in the U.S. maintained by IP protections.

Once again, the data clearly reinforce the concern that policies which seek to undermine IP protections or the incentives they create, such as proposals to waive patent protections or implement government price controls for innovative treatments, could have catastrophic consequences on our economy and inhibit the discovery of new innovations that save lives.

Learn more about how our IP system benefits our economy, new treatment development and most importantly patients here.