Exploring linkages among innovation, productivity, and non-resident patenting: a CDM approach

This study hypothesises that non-resident patenting has important implications for the host country’s technological and economic progress. Non-resident patents can facilitate the diffusion of new technologies and knowledge spillovers from inventors in patent applications, leading to innovation and productivity gains for the host country. We empirically examine the impact of non-resident patenting on the host country’s R&D decision, R&D investment, resident patenting, and total factor productivity (TFP). Using the CDM approach with a sample of 188 countries over 2001–2019, and measuring patent activity in per-capita terms to ensure cross-country comparability, we find that non-resident patenting positively and significantly affects R&D intensity and TFP in High Income and Upper Middle-Income countries, while effects are statistically insignificant in the full sample and in the Lower Income countries. The income-group heterogeneity of these results emphasises that international knowledge spillovers are not automatic but depend critically on domestic absorptive capacity. The CDM framework allows us to jointly address selectivity and simultaneity, while interpreting R&D intensity as a country-level measure of absorptive capacity.