Accounting for the recent surge in U.S. patenting: Changes in R&D expenditures, patent yields, and the high tech sector

We decompose the recent patent increase into components representing (1) an increase in resources made available to research and development, (2) an across-the-board rise in the patent yield of an R&D dollar, and (3) changes in the patent yield in individual industries. Two high tech fields, computer hardware and pharmaceuticals, account for 22 percent of the patent increase. While these two industries had the fastest R&D growth among the industries we study, the pharmaceutical industry experienced a decline in its patent yield, limiting its patent growth. We show that increased R&D spending accounts for 70 percent of the patent increase. We discuss our results in the context of alternative hypotheses of the patent surge. We also compare our results to the anecdotal evidence of firm R&D performance at the industry level.