Innovation convergence

This paper sheds light on convergence of innovation (patenting) using data from two-digit manufacturing industries in 32 countries over the period of 1976-2006. It shows that patenting rates tend to converge over time (patenting growth is faster when initial patents are lower), including within countries (across industries) and within industries (across countries). Notably, the quality (citations and citations per patent) and efficiency (patents per worker) of innovation also exhibit convergence. Convergence is widespread across all countries and industries in our sample, and in all time periods. Country-level data confirms patent convergence continues through 2020. Patent convergence is stronger where financial development, international financial integration, and institutional quality are higher, and under the presence of financial policies supportive of financial liberalization. These factors contribute to both within country (across industries) and within industry (across countries) convergence. The results highlight the importance of financial and institutional environment for the growth of patenting, and ultimately for economic growth and productivity.