Value creation, value capture, and economic growth: Revisiting the innovation–economic growth relationship and implications for sustainable technologies and AI

This study examines the relationship between technological innovation and economic growth, distinguishing between two key components of innovation at the country level: value creation through invention and value capture through commercialization. Using panel data on 43 OECD member and partner countries from 2000 to 2020, we proxy value creation using aggregated patent counts and multiple dimensions of patent value. We proxy value capture with aggregated venture capital (VC) investment, which serves as an indicator of countries' capacity to commercialize and scale new technologies. To account for persistence in growth and potential endogeneity, we estimate dynamic panel models in first differences with instrumental variables. Our results show that raw patent counts are not systematically associated with economic growth, while value-adjusted patent measures, especially patents with at least one forward citation and patents protecting radical inventions, exhibit positive associations. Moreover, the growth relevance of inventive activity is systematically greater in countries with stronger VC activity, underscoring the importance of financial and institutional conditions that enable technologies to be commercialized at scale. A descriptive application of this framework to artificial intelligence and sustainable technologies reveals pronounced cross-country differences: countries that lead in patent volume often differ from those that lead in invention quality and commercialization capacity. Overall, our findings highlight the policy relevance of innovation strategies that jointly foster high-quality invention and the conditions needed to translate technological advances into broader economic value.