9.5. Technology across borders
Digital technologies are often widely applicable and globally marketable, leading inventors to seek intellectual property protection for them in multiple markets. The United States is an especially important market, as almost all (92%) IP5 patent families (patents filed in two or more countries, at least one being in the top 5 national patent offices) for ICT-related technologies are filed at the United States Patent and Trademark Office (USPTO). China has the second most filings at almost 60%. The top inventor country for ICT-related IP5 patent families filed at the USPTO is Japan (24%), rather than the United States (17%), but US-located inventors account for around a quarter of ICT-related IP5 patent families at the European Patent Office and over half at patent offices in Canada, Australia and Israel.
Developing digital technologies can entail significant investment in research and development (R&D). ICT-related patents make-up a considerable portion of the top 2000 R&D-performing companies’ patent portfolios, especially in ICT services, publishing and broadcasting, and telecommunications industries. The majority of patents held by top R&D-performers in the computers and electronics industry are also ICT-related. Finance and insurance stands out as an industry that is not directly related to ICT, but where a large share of patents are ICT-related (70%).
Most of the top R&D-performing companies are multi-national enterprises (MNEs). One potential effect that can be associated with this is the diffusion of technologies across borders. Hosting a local MNE affiliate can be one way for economies to gain access to certain technologies. Similarly, one business may take a stake in another business, at home or abroad, to gain access to technology it owns. The extent to which such transactions happen across borders depends on the extent of regulatory and other restrictions in the investee country. The OECD Foreign Direct Investment Regulatory Restrictiveness Index (FDI RRI) gathers information on the strength of statutory restrictions in each country related to the taking of equity stakes in domestic companies by foreign parties, requirements for official approval, rules on the appointment of directors and other key personnel, and other areas of potential restriction. Overall, FDI restrictiveness still varies markedly between countries. Indonesia and China have the highest overall scores, at around 0.3. In China, the telecommunications sector – which is especially reliant on digital technologies – is particularly highly restricted (0.75). Telecommunications restrictions are also higher than the average level of restriction in non-European OECD countries and in Sweden. EU countries show relatively fewer restrictions, with many having zero restrictions in telecommunications.
40% of patents held by the top R&D-performing companies worldwide are ICT-related.
Definitions
Patents protect technological inventions, (i.e. products or processes providing new ways of doing something or new technological solutions to problems). IP5 patent families are patents filed in at least two offices worldwide, including one of the five largest IP offices: the European Patent Office (EPO), the Japan Patent Office (JPO), the Korean Intellectual Property Office (KIPO), the US Patent and Trademark Office (USPTO) and the National Intellectual Property Administration of People’s Republic of China (NIPA).
ICT-related patents are identified using International Patent Classification (IPC) codes (see Inaba and Squicciarini, 2017).
Top R&D companies are the 2000 corporations with the highest reported worldwide R&D expenditures in 2014 (Daiko et. al., 2017).
Foreign Direct Investment (FDI) comprises foreign investors’ equity in and net loans to enterprises resident in the reporting economy. The FDI Regulatory Restrictiveness Index (FDI RRI) provides an indication of the extent of barriers to FDI in each country: 1 indicates measures that fully restrict foreign investment, while 0 indicates no regulatory impediments to FDI.
Measurability
Patent data are provided to the OECD by the EPO, JPO, KIPO, USPTO and NIPA. IPC codes attributed by patent examiners during the examination process indicate the technological domains to which inventions belong.
The FDI RRI measures statutory restrictions on foreign direct investment across 22 sectors. The Index covers four types of measures: (i) foreign equity restrictions, (ii) screening and prior approval, (iii) rules on key personnel, and (iv) other restrictions on foreign enterprises. The score for each sector is obtained by adding the scores for all four types of measures, and re-scaling this to a maximum value of 1. The 22 sector scores are then averaged to yield the overall score for each country. The main source of information is the list of country reservations under the OECD Code of Liberalisation of Capital Movements and their lists of exceptions and of other measures reported for transparency under the National Treatment Instrument (NTI). Additional sources include official national publications and information gathered by the Secretariat in the preparation of OECD Investment Policy Reviews.
Source: OECD, STI Micro-data Lab: Intellectual Property Database, http://oe.cd/ipstats, November 2018. See 1.
← 1. Data refer to IP5 families, by filing date, IP office of destination and top two locations of the inventors, using fractional counts. Patents in ICT are identified using the list of IPC codes in Inaba and Squicciarini (2017). Data for 2015 and 2016 are incomplete.
Source: OECD calculations based on JRC-OECD, COR&DIP© Database v.1. and OECD, STI Micro-data Lab: Intellectual Property Database, http://oe.cd/ipstats, November 2018. See 1.
← 1. Data refer to IP5 families, by filing date, owned by top R&D companies, using fractional counts. Top corporate R&D companies are those ranked according to their R&D expenditures in 2014. Patents in ICT are identified using the list of IPC codes in Inaba and Squicciarini (2017). Data for 2015 and 2016 are partial. Only industries with at least two company headquarters in the top 2 000 corporate R&D sample having filed for patents during 2013-16 are included.
Source: OECD, FDI Regulatory Restrictiveness Index Database, http://www.oecd.org/investment/fdiindex.htm, December 2018. See 1. StatLink contains more data.
← 1. The FDI RRI measures statutory restrictions on foreign direct investment in 68 countries, including all OECD and G20 countries, and covers 22 sectors. Four types of measures are covered: (i) foreign equity restrictions, (ii) screening and prior approval requirements, (iii) rules for key personnel and (iv) other restrictions on the operation of foreign enterprises. The score for each sector is obtained by adding the scores for all four types of measures, and re-scaling this to a maximum value of 1. The 22 sector scores are then averaged to yield the overall score for each country. The main source of information is the list of countries’ reservations under the OECD Code of Liberalisation of Capital Movements and their lists of exceptions and other measures reported for transparency under the National Treatment Instrument (NTI). Additional sources include official national publications and information gathered by the Secretariat in the preparation of OECD Investment Policy Reviews, as well as by other international organisations.