Impacts of the Japanese Patent System on Productivity Growth

We investigate empirically how the Japanese patent system has affected postwar growth in Japanese total factor productivity. The system has been criticized for several reasons, including that it encourages numerous filings of narrow claims that build incrementally on fundamental technologies developed by domestic and foreign inventors. Stated in different terms, the system was designed to promote technological catch-up and diffusion through incremental innovation. However, its effectiveness in achieving this purpose has not been studied systematically. We provide econometric evidence that the technology diffused through the Japanese patent system had a significant and positive impact on Japan’s technical progress. JEL Codes: F13, O31, O34