U.S. Patent Data Show No Innovation Slowdown
I'm reading Tyler Cowen's provocative book "The Great Stagnation" and blogging at 30,000 feet in the air on a Delta flight to Minneapolis (pretty amazing to be able to do that!). Here's a quote from p. 20 in the first chapter of the book where Tyler discusses the supposed slowdown in innovation, supported by this factoid:
"The United States produced more patents in 1966 (54,600) than in 1993 (53,200)."
MP: The top chart above (click to enlarge) shows the annual number of U.S. patents granted to U.S. residents from 1901 to 2009, using data available here from the World Intellectual Property Organization. The selection of just two random years (1966 and 1993) from more than a century's worth of patent data seems very arbitrary, and ignores the subsequent 69% increase in patents between 1993 and the peak in 2006 (see chart).
To illustrate how random and arbitrary the two years are, if we make a slight adjustment to the beginning and ending dates, we could say this: "The United States produced almost 18,000 more patents in 1994 (56,067) than in 1963 (37,291), or more than a 50% increase!"
And here's another amazing factoid: In just the single decade between 1988 and 1998 (a decade that spans Tyler's selection of the year 1993), the number of patents granted almost doubled from 40,497 in 1988 and 80,292 in 1998!
Further, the patent count in Tyler's book includes U.S. residents only. The bottom chart above shows the total number of U.S. patents granted to both U.S. residents and non-residents, and illustrates a dramatic increase in patent activity in the United States since the early 1970s, when the Great Innovation Stagnation supposedly started. In just an 11-year period between 1988 and 1999, the total number of patents granted more than doubled from 77,924 to 153,487. The graph also shows that if there was any period that could be considered an "innovation slowdown" it would have to be the first half of the 20th century, the period that Tyler claims was a period of technological breakthroughs.
To pick a few random dates, we could say that there were twice as many patents granted in 1915 (43,000) than 32 years later in 1947 (20,191), reflecting a 30-year period of stagnation in innovation.
Bottom Line: If there is a Great Stagnation or innovation slowdown, it's sure not supported by the U.S. patent data, especially when two random years are arbitrarily selected out of more than 100 years of patent data!