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Economic Impact of Intellectual Property


Greetings from DC. Intellectual property (IP)-intensive industries supported over 40 million jobs (direct and indirect) and contributed greater than $5 trillion to U.S. gross domestic product (GDP) in 2010. This accounted for more than one quarter of all jobs in the U.S. (27.7 percent) and over one third of total GDP (34.8 percent) in sectors including computers, audio and video equipment manufacturing, newspaper and book publishing, pharmaceuticals and medicines, and semiconductors among others.

This is the key finding of a report released by the Department of Commerce in April titled, Intellectual Property and the U.S. Economy: Industries in Focus. Using data from the United States Patent and Trademark Office and other sources, the authors first developed industry-level metrics on the use of IP to identify 75 IP-intensive industries. The report then examined trends and characteristics of these industries, and their contribution to the U.S. economy. Some of the other principal findings are summarized below:

* The U.S. economy is heavily dependent on some form of IP (virtually every industry either produces or uses it).

* Overall employment in IP-intensive industries has lagged other industries during the last two decades, due mainly to losses in the manufacturing sector (employment in non-IP-intensive industries was 21.7 percent higher in 2011 than in 1990). But between 2010 and 2011, the economic recovery led to a 1.6 percent increase in direct employment in IP-intensive industries, faster than the 1.0 percent growth in non-IP-intensive industries.

* Average weekly wages for IP-intensive industries were $1,156 in 2010 or 42 percent higher than the $815 average weekly wages in other (non-IP-intensive) private industries. This wage premium nearly doubled from 22 percent in 1990 to 42 percent by 2010. Growth in copyright-intensive industries (2.4 percent), patent-intensive industries (2.3 percent), and trademark-intensive industries (1.1 percent) all outpaced gains in non-IP-intensive industries. Patent- and copyright-intensive industries wages grew particularly fast in recent years, with the wage premium in patent-intensive industries increasing from 66 percent in 2005 to 73 percent in 2010; and the premium in copyright-intensive industries rising from 65 percent to 77 percent.

* The comparatively high wages in IP-intensive industries correspond to, on average, the completion of more years of schooling by these workers. More than 42 percent of workers aged 25 and over in these industries in 2010 were college educated, compared with 34 percent on average in non-IP-intensive industries.

* Merchandise exports of IP-intensive industries totaled $775 billion in 2010, accounting for 60.7 percent of total U.S. merchandise exports.

While the report does not directly suggest policy recommendations based on its findings - it purports to promote a better understanding of the industries where IP plays a vital role by developing new quantitative measure of IP-intensity by industry - it does highlight the important role of IP in the economy, particularly as a driver for economic growth and competitiveness.

The full report can be found here and the executive summary can be found here.

Gary can be reached here.



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