The Importance of Intellectual Property Protection to the U.S. Economy

Economy | Issue Briefs

No. 171
Thursday, September 03, 2015
by Gene Lattus

From the telegraph to the telephone to the iPhone, innovation has always been at the heart of the American spirit. In an era of rapidly increasing globalization, protection of the inventions and technologies that fuel much of the U.S. economy is more important than ever.

Intellectual Property Drives U.S. Exports. The World Intellectual Property Organization defines IP as creations of the mind, such as inventions, literary and artistic works, designs, and symbols, names and images used in commerce. This property is protected by each country’s patent, copyright, licensing and trademark laws and by international conventions, enabling people to earn recognition or financial benefit from what they invent or create.

The United States is a world leader in innovation, second only to Japan in the number of current trademarks registered and patents granted. [See Figure I.] Studies show that IP-intensive industries actually run a trade surplus — the value of exports less imports — reducing the overall U.S. trade deficit. Further, according to the U.S. Department of Commerce, in 2010, IP-intensive industries accounted for nearly 60 percent of U.S. exports.

IP Crucial to the U.S. Economy. The Commerce Department estimates that:

  • Intellectual property generated nearly $5.06 trillion of U.S. output in 2010, or roughly 35 percent of gross domestic product (GDP).
  • IP-intensive industries accounted for 27.1 million jobs and, indirectly, for another 12.9 million.
  • All told, IP-intensive industries employed nearly 27.7 percent of all American workers.

Furthermore, wages in IP-intensive industries are on average 42 percent higher than non-IP intensive industries.

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