Chart of the Week: The Spread of Ideas and Innovation

IMF Blog, July 30, 2018

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Globalization has accelerated the spread of knowledge and technology across borders, helping to increase productivity and potential growth in many countries and at the global level.
Technological progress is described as the key factor behind the improvements in incomes and standards of living.
Technology tends to spread at different speeds across countries.

A recent IMF study traces knowledge flows by using the extent to which countries cite patented innovations from the technology leaders as prior knowledge in their own patent applications.
The chart shows patent citation patterns over time to reveal who is using the global stock of knowledge.

In 1995, the United States, Europe, and Japan were dominating global patent citations.
In more recent years, China and Korea (depicted together as “other Asia”) have made increasingly large use of the global stock of knowledge as measured by their patent citations.
Knowledge links have intensified over time:
- Within regions (described as red arrows in the chart).
- Across regions (described as blue arrows in the chart).

Interconnectedness alone is not sufficient; the assimilation of foreign knowledge and the capacity to build on it most often requires scientific and engineering know-how.
Investments needed:
- Education.
- Human capital.
- Domestic research and development.
Intellectual property considerations:
- An appropriate degree of protection and respect of intellectual property rights—both domestically and internationally—is required to preserve the ability of innovators to recover costs while ensuring that the new knowledge supports growth globally.
Distributional and competition concerns:
- Policymakers must make certain that the positive growth benefits from globalization and technological innovation are shared widely across the population.
- Ensure that innovating firms do not exploit newly acquired technology to gain excessive control of a market to the detriment of consumers.

Publication date: July 30, 2018.
Photo credit referenced: Richard Ellis/UPI/Newscom (caption: Young woman watches robotic fish in Gangneung, South Korea).

Source: Chart of the Week: The Spread of Ideas and Innovation — The Editors, July 30, 2018

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