National innovative capacity in East Asia

The innovative capacity of a country is the basic driving force behind its economic performance. In a recent paper (2002), Furman, Porter & Stern (FP&S) developed a methodology for assessing innovative capacity in terms of the national factors that influence the rate of patenting by the country in the USPTO; they applied this methodology to a panel of 17 OECD countries over the 25 years from 1973 to 1996. In this present paper, we extend the FP&S approach by applying it to five “latecomer” countries from East Asia, none of which was included in the FP&S study. First, we reproduce the FP&S methodology in relation to the five East Asian countries, gathering comparable data over a comparable (but truncated) time period. Our results here both replicate those of FP&S, with some important differences: we find that fewer national factors influence the rate of patenting in countries that have become innovative only recently, and that their patenting performance is diverging (as opposed to the convergence demonstrated by FP&S). Second, we extend the framework to encompass variables not considered by FP&S, in particular the impact of public-sector R&D; we show that it has exerted a significant effect on patenting rates, which reinforces its claim to be considered as part of the innovative capacity of a latecomer country. Third, we provide some empirical and case study evidence of current patenting trends in one of the five countries, namely Taiwan, to illustrate the depth of strategizing involved in raising the level of the country’s innovative performance. In these ways, we shed light on the process through which a latecomer country is able to close the gap with the more developed countries, by channeling resources towards the raising of its innovative capacity.