In most OECD countries, the gross domestic spending on research and development (R&D) is substantial, on average 2.5 percent of gross domestic product. A large share of the R&D expenditures, including research in the business enterprise sector, is funded by the governments. This paper investigates empirically the dynamics between firms’ employment, output, success in obtaining public research funding, labour productivity, return on assets (ROA), and capital intensity in the periods before, during, and after filing a patent application. The analysis is based on a panel of accounting data for all Norwegian firms merged with patent application data from the Norwegian Industrial Property Office (NIPO). The final panel covers a period of 18 years (2001-2018). Since the sample includes the whole population of Norwegian firms, it allows to form both a large control- and treatment-group (firms that file at least one patent application in the period). year a patent application A patent has significant positive effects on employment, output and public research funding both in periods before, during and after it is filed. The effects are largest at the extensive margins, i.e. largest for firms without any prior patent applications. Additional patents have small or insignificant effects. We also find that there is a negative correlation between R&D support and age. The overall finding is therefore that patents are important in the early in the life-cycle of firms.
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