Patent Statistics as a Measure of Technical Change

This paper examines a question of long standing: How can one obtain operational indexes of inventive and innovative activity and technical change? Specifically, for a sample of fifty-seven pharmaceutical manufacturing firms, we attempt to determine how well a simple count of invention patents serves as a surrogate for two alternative measures of technical change: the number of research and development personnel employed, reflecting inputs into the innovative process, and the value of new product sales, which reflects outputs of the process.