The global economic landscape has fundamentally changed since the fall of the Berlin Wall. Following this historic event, an American political scientist, Fukuyama, predicted the end of history. The march of economic globalization would continue without encountering major obstacles. Thirty years and a global virus later, the tone has changed. After the paradigm of irresistible globalization, the time has come for renewed concern for the risks linked to too much economic interdependence.
This shift has sparked a debate about technological sovereignty, a concept that refers to a country's ability to master and deliver technologies essential to its competitiveness and well-being. Technological sovereignty differs from national autarky or technological self-sufficiency. The aim is not to develop all technologies in one's own country, but – when acquiring technologies abroad – to avoid unilateral dependence on a particular country.
The need to take technological sovereignty into account has become evident during recent economic and political crises, whether the consequences of Covid or semiconductor supply problems. It was the same with the trade tensions between the United States and China in terms of high technology or the war in Ukraine.
Reliable partners
Faced with these sovereignty concerns, policy makers seek to reduce technological dependence and, to do so, seek information on the relative position of their country compared to other regions of the world. The goal ? Reconsider certain commercial relationships to favor exchanges with partners who are both reliable on a geoeconomic level and share the same values. It is still necessary to have good information on the reality of innovation in different areas of the world.
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To do this, we analyzed technological sovereignty, by breaking down global invention activity into four economic regions, namely Europe, the United States, China and Japan with Korea. By examining thousands of patent applications from the international patent system (PCT) between 2000 and 2020, we were able to analyze how the global positioning of these regions has changed over the past two decades.
Specifically, we examined the strength and direction of invention influence at the global and bilateral levels. To do this, we developed a measure that uses citations generated by international search reports (ISRs) during the international phase of PCT applications. This allows us to calculate the extent to which inventions in one geographic area provide the basis for inventions in other areas.
The PCT international patent system is administered by the United Nations World Intellectual Property Organization and provides intellectual property protection in 157 countries.
Almost tripling of requests
Usage of the PCT system has increased significantly, from 97,414 applications in 2000 to 254,008 in 2020. This growth is heavily influenced by East Asian countries, with China leading filings since 2019. shift of innovation activity from the West to East Asia is clearly evident. In 2000, more than three-quarters of PCT applications still came from the United States and Europe. 20 years later, more than half of the world's PCT applications came from China, Japan and Korea.
However, the increase in the number of patent filings only partially measures the real influence of inventions. Our research focused on citation data from PCT applications between 2000 and 2017. The results obtained in this way put previous conclusions into perspective. First, this method indicates that the United States maintains its status as the leading technological superpower, exerting strong global influence.
First, looking at how often a patented invention is taken up by a different region, as an indicator of average global influence, we find that the United States has the strongest position. Compared to European patents, American inventions are almost twice as often taken up by another region. Compared to China, Japan and Korea, the American advantage appears even greater.
Chinese dependencies
Next, in order to measure bilateral influence, we count the frequency with which patents from one region are used as a basis for subsequent inventions by the considered partner region and vice versa. If a region's patents are relatively more frequently used, then that region exerts stronger bilateral influence.
Here again, on this criterion, the United States outperforms all other geographic areas. More precisely, they occupy a position of strength compared to the three other regions considered. Despite close integration between the United States and Europe in terms of bilateral knowledge flows, Europe consistently displays a lower level of influence than the United States.
Even though China has filed the highest number of patent applications in recent years, it still remains dependent on all other geographies. Japan and Korea, on the other hand, previously held a prominent position but have seen their average bilateral influence decline over time.
Europe is relatively strong in key technologies, although the United States can also claim first place in this area. These are future-oriented technologies – such as advanced materials, industrial biotechnology and microelectronics – that are particularly important for future economic development. For inventions in these technologies, Europe achieves global influence above the global average.
Political implications
These results should encourage American policy makers to defend the strong position that remains theirs. If the country is no longer in the lead in terms of patent filings, it remains dominant in terms of the global influence of its inventions. European policymakers could focus on promoting key technologies, an area in which the region has already gained a relative advantage. At the same time, Europe should do everything possible to reduce its future dependence on Chinese innovations.
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Current global events pose a challenge to Chinese policymakers. While China improved its bilateral influence in the 2010s, its growth has slowed and is now similar to that of the United States and Europe. Our results suggest that China is not poised to overtake the United States as a technological superpower.
Finally, Japan and Korea have made significant contributions to global innovation in previous decades. However, especially in Japan, the most recent innovations have not yet convincingly translated into international influence vis-à-vis its partners. Japanese political decision-makers should therefore tackle this as quickly as possible, especially since the archipelago's economy is facing challenges linked to the aging of the population.
Whatever decisions are ultimately made by different governments, our study serves as a reminder that even as the United States defends its leadership position, China shows the greatest increase in its global influence over the past two decades.
While unconstrained global economic integration has lost popularity, collaboration between like-minded and geoeconomically reliable partners still allows countries to benefit from their inclusion in global innovation networks. However, dependencies on cooperation with less reliable countries should be reduced over time, while strengthening inventive capacity domestically or among reliable partners.
This article is co-authored by Philipp Boeing (Goethe University, Frankfurt and ZEW – Center for European Economic Research, Mannheim).
