Shaping Innovation: Can Industrial Policies Boost Patent Applications?

Sandra Baquie, Yueling Huang, Florence Jaumotte, Jaden Kim, Rafael Machado Parente and Samuel Pienknagura

No 2026/047, IMF Working Papers from International Monetary Fund

Abstract: This paper presents a global empirical analysis of how industrial policies (IPs) affect patent applications, with an instrumental-variable strategy that addresses selection in policy targeting by leveraging retaliatory dynamics. On average, IPs do not increase domestic patent applications over a four-year period, except when they target sectors with potential distortions or externalities, such as infant industries or low-carbon technologies. However, IPs temporarily boost foreign patent filings within the same timeframe, consistent with strategic front-loading by foreign inventors seeking to secure technology protection, and perhaps market access, in the IP-targeted sector. This link between foreign patent applications and IPs is stronger for export-oriented policies compared to domestic subsidies, for IPs targeting innovation-central sectors, and in emerging markets and developing economies.

Keywords: Industrial Policies; Innovation; Patents; Networks; Low-carbon technology; IMF working papers; ip-targeted sector; views of the IMF; income group; c robustness; Exports; Trade policy; Export subsidies; Estimation techniques; Global; East Asia; Europe; Asia and Pacific (search for similar items in EconPapers)
Pages: 49
Date: 2026-03-13
New Economics Papers: this item is included in nep-int, nep-ipr and nep-tid
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