Did you know that the industries that rely most on intellectual property (IP) account for nearly 35 percent of U.S. GDP? Here we look at how IP-intensive industries move our nation forward.
Intellectual property (IP) rights support creativity and innovation in virtually every industry, ultimately playing a sizable role in generating economic growth. Until recently, however, which industries produce or use significant amounts of IP and rely most intensively on these rights has been unclear.
The United States Department of Commerce recently released a comprehensive report, titled Intellectual Property and the U.S. Economy: Industries in Focus, which provides a number of insights on IP-intensive industries and their economic impact. The report is a joint product of the U.S. Commerce Department’s Economics and Statistics Administration (ESA) and the U.S. Patent and Trademark Office (USPTO).
“This first-of-its-kind report shows that IP-intensive industries have a direct and significant impact on our nation’s economy and the creation of American jobs,” Commerce Secretary John Bryson said in an announcement of the findings. “When Americans know that their ideas will be protected, they have greater incentive to pursue advances and technologies that help keep us competitive, and our businesses have the confidence they need to hire more workers.”
Drawn from the report’s concluding analysis, here are four key ways that IP protections have a direct and significant impact on the U.S. economy.
1) IP-Intensive Industries Are Wide-Ranging across the Economy.
IP is used in virtually every segment of the U.S. economy, but the Commerce Department report specifies the 75 industries (from among 313) that made the most extensive use of such protections.
Through a supply chain that stretches across the economy, these industries are widely diverse. Among the most IP-intensive industries: computer and peripheral equipment; audio and video equipment manufacturing; newspaper and book publishers; pharmaceutical and medicines; semiconductor and other electronic components; and the medical equipment space.
2) IP-Intensive Industries Contribute Substantially to Foreign Trade.
IP-intensive industries contributed $5.06 trillion in value added to the U.S. economy in 2010, or 34.8 percent of total gross domestic product (GDP). From 2000 to 2010, exports of IP-intensive industries increased 52.6 percent while imports of IP-intensive industries rose 61.6 percent. Merchandise exports of IP-intensive industries totaled $775 billion in 2010, accounting for 60.7 percent of total U.S. merchandise exports. Merchandise imports of IP-intensive industries stood at $1.34 trillion, or 69.9 percent of total U.S. merchandise imports.
Manufacturing industries were responsible for almost 99 percent of IP-intensive merchandise exports in 2010, with oil and gas extraction and software publishing accounting for the rest. At $64 billion, exports from the semiconductors and electronic parts sector led the way, accounting for 8.3 percent of IP-intensive industries’ merchandise exports. The next largest export categories were basic chemicals ($58.4 billion), motor vehicles ($52.4 billion), pharmaceuticals and medicine ($49.4 billion), and computer and peripherals ($44.1 billion).
3) IP-Intensive Industries Support at Least 40 Million American Jobs.
Collectively, at least 40 million jobs – or 27.7 percent of all U.S. jobs – were directly or indirectly attributable to the 75 most IP-intensive industries in 2010, either on payrolls or under employment contracts. Direct employment by the most IP-intensive industries identified in the report amounted to 27.1 million jobs in 2010. Meanwhile, indirect activities associated with these industries provided an additional 12.9 million jobs throughout the economy in the same year.
The 60 trademark-intensive industries accounted for a sizable share of IP-intensive employment in the U.S., with 22.6 million jobs in 2010 (83 percent of all IP-intensive jobs), while the 26 patent-intensive industries accounted for 3.9 million jobs and the 13 copyright-intensive industries provided 5.1 million jobs.
4) Jobs in IP-Intensive Industries Pay Relatively Well.
Workers in industries deemed IP-intensive earn more on average than those in other sectors. Average weekly wages for IP-intensive industries were $1,156 in 2010, 42 percent higher than the $815 average in non-IP-intensive private industries. This wage premium nearly doubled between 1990 and 2010, from 22 percent to 42 percent.
Patent- and copyright-intensive industries have seen particularly fast wage growth 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.
“IP protections have a ripple effect in our private sector. They don’t solely benefit the company that applies for a patent,” Deputy Commerce Secretary Rebecca Blank wrote on Commerce.gov. “For example, a new patented technology in computer manufacturing could increase the demand for products in related industries, such as semiconductors. Likewise, a new patent-protected green technology can be used to help auto manufacturers build more energy-efficient cars.
“However, IP protections aren’t just important for businesses and entrepreneurs – they are important for working families, too,” Blank continued. “IP-driven jobs are good jobs. … These good-paying jobs help support economic security for America’s middle class, and they will continue to do so in the years to come.”
Given the important role that IP plays in sustaining long-term economic growth, protecting and enforcing IP rights is critical to advancing the economic recovery, driving national competitiveness and export growth, and creating high-quality jobs.
Although the Commerce Department report does not make policy recommendations, the executive summary of the report does note the importance of “achieving a balanced system of IP rights that protects inventors and creators from unlawful use of their work while encouraging innovation, competition and the markets for technology in which IP is transacted.”
The report’s findings will likely fuel ongoing debates over how to implement landmark patent reform legislation enacted last year, as well as how to protect IP rights through anti-piracy and cyber-security legislation.
|Intellectual Property and the U.S. Economy: Industries in Focus|
|by U.S. Department of Commerce, March 2012|
|Intellectual Property-Intensive Industries Contribute $5 Trillion, 40 Million Jobs to US Economy|
|by U.S. Patent and Trademark Office, April 11, 2012|
|Executive Summary: Intellectual Property and the U.S. Economy: Industries in Focus|
|by Economics and Statistics Administration, April 10, 2012|
|Click for more|
|Intellectual Property-Intensive Industries Contribute $5 Trillion, 40 Million Jobs to U.S. Economy|
|by Commerce.gov, April 11, 2012|
|Patents, Copyrights Boost Economy With Jobs, Report Finds|
|by Bloomberg News, April 11, 2012|
|Click for less|