Robin Marchione

Guilherme Vieira Dumit

Anton Claude Bettink

Adrian Di Felice Mezquiriz

ECO 204 - Dr. Baranes

Innovation

Abstract:

This paper examines the economic effects of technological advancements, and

patents as property rights, with regards to innovation. In researching the effects of

technological advancements on the economy, this work discusses and contrasts

scholarly Mainstream, Institutionalist, and Austrian perspectives. For all economic

schools discussed, it was hypothesized that they would, to some degree, be in

accordance that technological advancements stimulate economic growth. However,

different schools have varying opinions on the processes that cause and affect

technological advancements on the economy. This work is responsible for depicting

these views and discusses the role of patents in different perspectives

Introduction

Innovation can be defined as the application of more effective or generally

better solutions to market desires. It is regularly acquired through new products or

services that are considered original and help society or a market create more

efficient production. As seen in Romer's Endogenous technological change,

"technological change arises in large part because of intentional actions taken by

people who respond to market incentives" (Romer, 1990, 72). The innovation

process works as a barrier to entry as well as improving economic conditions,

depending on the environment. In both cases, innovation plays a crucial role as a

catalyst for growth, for industries, and the economy as a whole.

In the past, there has been a lot of discussion regarding the purpose,

functioning, and impacts of patents on free and regulated markets. The introduction

of patents has led to debate over the conflicting theories from various schools of

economic thought. This paper will support the claim that patents are used to

preserve monopolistic rights and thus cultivate the existence of monopolies while

spurring innovation and economic growth. In order to juxtapose this hypotheses

effectively, and to create a sensible conclusion, it is necessary to analyze

mainstream, as well as alternative economic perspectives. Despite examining the

role of intellectual property rights, this paper will emphasize how intellectual property

rights have affected technological innovation, therefore economic growth, and the

role of intellectual property going forward.

Technological Advancement

As Robert Solow and Trevor Swan mainly indicate through their Solow-Swan

model, economic growth is reliant on increasing inputs and technological progress in

the long run (Solow, 1956, 66). Solow was responsible for stating the idea that

capital accumulation would lead to an increase in labor productivity through his

model of investment and growth. What is meant by "capital" varies throughout

different economic schools. This fairly recognized definition is significantly based on

what is called the "constant-returns-to-scale production" technology (Grossman &

Helpman, 1991, 22). CRS production reflects a manager's decisions in a case of, for

example, when all inputs are doubled, new values for output will be also doubled.

Additionally, Romer states in Endogenous Technological Change, "[g]rowth ... is

driven by technological change that arises from intentional investment decisions

made by profit-maximizing agents", (Romer, 1990, 71), which through intentional

investment decisions, Romer aims at government investment prevenient from taxes

and current organizations. These profit-maximizing agents encompass the goals and

aims of current organizations, as they only focus on improving their returns.

Therefore, at the same time the supporters of this mainstream view see innovation

based primarily on capital accumulation. They all relatively agree on having one goal

that comes from variables such as resources, labor, and organization of the modern

enterprises: profit.

Similar Mainstream views to Romer's mentioned in Increasing returns and

new developments in the theory of growth. He depicts that most recent economical

models show an increase in returns when innovations are included in the production

process (1989, 29). Thus, it can be suggested that the mainstream perspective

shows that besides the specific production variables that stimulate development, the

original concepts of labor and capital that are incorporated in the production process

essentially improve production to such an extent that economic growth is achieved.

Also, in a sense this view supports the case in which economic growth arises from

increases in technological change, which is fairly recognized as innovation. As

mentioned then, innovation is the main catalyst of this profit-making process looking

to reach growth through more accelerated methods. This mainstream view has for

long been the most widely accepted, with the exceptions of other schools'

supporters, such as institutionalists and austrians.

In the case of the Institutionalists, technology is seen differently: it is regarded

as the determinant of how instrumental functions are achieved. Technology, whether

it be physical matters or know-how related, allows us to continue the process of

societal and economical development, just as it has brought us to what we see today

as a civilized society. Therefore, this view, as John Foster denotes, sees technology

as a determinant of "the character of the means of life and the character of the

process of providing those means." (1981, 912) This can be understood as that

every experience in life is changed and created by technology, as well as the tools

and means to provide technologies, with an obvious goal to solve social problems.

For Institutionalist economists, separating technology is also essential. It is viewed

as a process that divides between the tools and machinery that make up

"technology", and/or the creation of new goods or processes. Since each social

problem requires a solution, the existence of these technologies in society is such

that the answers to those must rely on institutional adjustment.

In The theory of institutional change, Bush (1987) defines institutional

adjustment in two phases: (1) ceremonial encapsulation, where all technological

innovation is enveloped; and (2) progressive institutional change, where instrumental

values are prioritized before ceremonial values. This process allows for more

desirable technological changes, instead of focusing on values that do not add to the

social "knowledge fund", the fund can be expanded with a reliance on these

instrumental values. For Veblen, institutions are responsible for determining how

technologies are implemented into society, where some institutions tend to favor

"ceremonial" values, based on managerial decisions (Veblen, 1904). Veblen saw

technological change as a process of cumulative causation, which refers to changes

in technologies as well as societal behavior. This means that he saw technology

arising out of gaps or deficiencies in society, a kind of combination of “intellectual

curiosity” and a drive for more efficient processes: “[a] change in prevalent habits of

thought”. ‘[A]ccording to the institutionalist perspective, especially in regards to the

economic system, technological 'innovation’ is evidently more of a cultural process,

where knowledge and creation (innovative ideas) are created by a more collective

collaboration in society. Following his view, Veblen agrees on the idea that

institutional adjustment should be pursued to make the use of technology more

aligned with 'instrumental values’'. As human life is in a state of constant

development and trying to solve certain social problems, technological advances

cannot be stopped (and vice-versa), because that would lead to an obstruction of

society and there would be no institutional adjustment present, meaning a stagnation

in society's development. Then, how does technology and institutional adjustment

relate to innovation in this view? Considering the amount of problems that a society

encounters, they substantially work as a stimulus for innovative methods and tools.

As Bush sees it (1987), throughout the years these changes have facilitated the

transformation in the industrial environment and worked as an incentive for more

innovation to take place. Therefore, the Institutionalists are aware that there is a

constant necessity for these innovative changes that have shaped modern industries

in this society to a position where innovation has not only become a constant feature

but also the main key to problem-solving embedded in the community.

Austrian supporters see innovation coming from a different, though vital

source. As noticed by Baumol and Schumpeter, the entrepreneur has not only the

willpower to "break down the resistance that the social environment offers to change"

(Schumpeter, 1947, 157) but also the attention to recognize opportunities that may

become profits. That attention promotes and ensures a free market that can only be

more and more efficient, considering these will always look for innovative and

productivity-enhancing opportunities. As their job is to realize imperfections that may

result in future profits, they find themselves in an environment where using the

available resources efficiently also meets their other goal that is realizing gains. As a

proof of the austrian view on innovative methods, in the Creative Response in

Economic History, Schumpeter states that "the entrepreneur and his function are not

difficult to conceptualize: the defining characteristic is simply the doing of new things

or the doing of things that are already being done in a new way (innovation)."

(1947,151) Schumpeter defines innovation (the catalyst for economic growth) as

"creative response", which can be anything that is outside of the range of existing

methods or practices done by an industry, economy, or some firms (1947).

Schumpeter also finds innovations to be different from inventions, as inventors have

no connection with entrepreneurs, since an entrepreneur "gets things done", but

does not necessarily represent something scientifically new. He discusses the fact

that industries must constantly revolutionize their economic structure internally,

which means innovating through more effective processes or better products.

Nonetheless, he argues that “creative destruction is the essential fact about

capitalism.”, meaning that a process of industrial change must take place regularly,

often creating these new processes. Also, in The theory of economic development;

an inquiry into profits, capital, credit, interest, and the business cycle (1934),

Schumpeter sees our economy as a non-stationary one that rewards innovative

entrepreneurs "above-natural" profits or surplus gains, what would be prevented from

the existence of competition in the market. Concluding Schumpeter's view, in any

condition, technological improvement is acquired from society, since it is a "central

feature of economic development" (1934, 40), while he also argued that economic

development cannot happen with innovation, entrepreneurs, and market power. For

Schumpeter, the idea of constant innovative methods coming from entrepreneurs

could provide better outcomes than the price competition system that is fairly known.

In this school's view then, innovation is acquired mainly as an entrepreneur's

product, where it is the maximum profit-seeking activity, and originally set as a main

goal by these entrepreneurs and austrian supporters.

In conclusion, advancements in technology stimulate economic growth,

improving technologies necessitates the various aspects that play a role in economic

development, such as labor, investment, human capital, etc.

The mainstream school of thought, as supported by Romer, reinforces that

technological advances encourage growth as they are driven by intentional profit

maximizing behaviors. These can range from individual to political behaviors, such

as government investment towards innovation through tax collection. Therefore, the

Mainstream frame of thought supports the benefits of promoting innovation in the

production process as well as the factors of labor and capital. This is because

technological advances are implemented as methods for profit maximization.

Although this theory seems very eloquent and culturally accepted, there are different

schools of thought that differ in their approach to the area of innovation and

technological advances. For example, for Institutionalists, technological advances

are not viewed solely as means for economic growth but also a measure for

understanding society and its influence on the civilization. There is a reciprocal

relationship between humanity and technology as technology originates, impacts and

culminates from societal factors. In addition, Institutionalists view technology as a

factor that influences the way institutions are created as technology promotes

institutional principles based on instrumental values rather than ceremonial.

Thorstein Veblen suggests that technology is important as it shapes societal conduct

because it arises from gaps in society and aims to satisfy them. In this regard, we

can affirm that: for Institutionalists, technology and innovation are collective rather

than individualistic, and that technological advances should be directed towards

social development and instrumental behaviors.

Another important approach to this subject is that of the Austrian school of

thought where technological advances arise in a different form. Austrian followers,

emphasize the role of the entrepreneur. They suggest that the entrepreneur is driven

by profit seeking attitudes where they aim to anticipate methods where innovation

can maximize efficiency and profitability. In this view, the structure of the free market

is necessary as it enables the entrepreneur to engage in processes that promote

gains from using technological advances towards higher efficiency. In other words,

the entrepreneur, by creating or revolutionizing existing methods of production is

able to benefit from higher surplus created by more efficient allocation of resources,

new machinery, et cetera. Also, it is important to note the difference between

invention and innovation, as the latter one is actually able to promote change.

Innovation supports the concept of creative destruction where innovation destroys

existing structures and implements the more efficient one, and thus the process of

creative destruction is key for capitalism as well as economic growth. So, for

Austrians, the entrepreneur is the figure that by innovation achieves overly profits

while promoting economic development.

We can venture to affirm that these three schools of thought see

innovation and technological advances as factors that promote positive outcomes for

the economy and for society. Mainly, they differ in aspects such as the nature from

which innovation arises as well as its overall effects. However, economically

speaking, innovation is seen as the engine that drives economic growth and

development, as well as influence society and its institutional basis.

Patents and Property

As an originator of economic growth, innovation has been assured primarily

through patents, allowing for the protection of ideas. A patent is defined as an

intellectual property, or certain quantity of exclusivity rights granted by a

governmental or dominant organization that allows for a timely constrained use of an

innovative product or process. In ancient Greece, a cook was awarded an exclusive

right for one year to sell a dish if it were considered "new and fabulous." As it can be

seen then, back in those years an expression of the invention did not matter as

much, as people were more concerned with the knowledge utilized and put into the

production process that originated that exclusivity. To add to those rights awarded, in

the early 1400's, an architect named Filippo Brunelleschi was granted the first

modern patent for his invention of a river transport vessel through which he could

transport marble. Along with various others, this patent originated a statute in 1474 to

define some means of control on that issue. This statute required three main

constraints: (1) usefulness, where it should be useful for some process utilized in

society; (2) newness, where it requires to be the first one of its kind or not equal to

anything that has the same purpose; and (3) time limits, where there was a specific

period that these patents 'protection' lasted for.

It was at that time that a philosophical shift became evident, as we engaged

into the era of classical liberalism, when more collectivistic philosophic thoughts were

shifting to more individualistic philosophic thoughts, what was necessarily essential

to patents. At this time, three key shifts needed to occur in order for patent rights to

take hold: (1) a technological shift, affecting the way in which new knowledge was

created, since the knowledge you first learned could be used to create more,

resembling a more collectivist view of knowledge creation; (2) a legal shift, where the

goods being produced were to be viewed as important matters, and for those you

would have to be able to protect; (3) a philosophical shift, where the exceptional work

of an individual inventor was judged as the main source of knowledge creation.

On the basis of economic theory, ownership is conceived to be in line with

Locke’s natural rights and theory of property, in that what is produced by one’s labor,

can then be considered to be owned by the producer. According to Locke, the

natural owner of something, is the person who produced or procured such an object.

However, we often overlook the fact that ownership is not often an individualistic

thing. Generally, ownership arises from collective “cooperation of an industrial

community” (Veblen, 1898, 353) and through this community the knowledge and

resources that are available are in some way involved in the production process. So

the idea of natural rights and the notion that ownership is because of individual labor

is what Veblen describes as “absurd”. Ownership, then can be described, in terms of

individual ownership of an object or resource, by suggesting that the owner has

designated control over what is done to or with the resource.

According to Jaffe and Lerner “Reforms in the US patent system have caused

an explosion in patent applications.” (Jaffe and Lerner, 2004) These reforms have

been imposed to protect the patent holders, as strengthening the protection policies

of patents can spur innovation and economic growth. “Initially, patents were awarded

to benefit the Royal’s favorites. The connection between invention and exclusive

property rights that was then introduced, was an institutional revolution that helped

spur invention and arguably paved the way for the industrial revolution” (Acs and

Sanders, 2008). This implies that the inventor, theoretically is the person who is

entitled to “legal ownership” over the product.

The creation of a good by an individual spurred the ownership of these

methods and enabled one to obtain patents, paving the way for the industrial

revolution. As this sense of ownership is sought from many individual creators, some

philosophers tried to define private property.

Generally, property is what belongs to someone or with something, and is

used to describe the rules for which people are able to access and control

belongings such as: land, means of production, any representation of capital,

manufactured goods, ideas, inventions, and intellectual products. From a

philosophical standpoint, property can be divided into three main components, which

are private property, common property, and collective property. In a private property

system, rules and regulations govern the idea that resources are allocated according

to the deciding authorities or to the assigned individuals. Individuals that have been

assigned resources then have control over them, and it is up to them to decide what

should or could be done with the resources. However, private property still has to fit

within the governing rules of society. When considering common property, resources

are governed by rules that allow for resources to be used and be available for the

whole of society. This could be a public park or library. The central concept of this is

to allow fair access for anyone who wishes to use the resource and restrict

preclusion by others. Finally, a collective property is when a community determines

how resources are going to be allocated. This is done on a basis of social interest, in

what way will the allocation of resources be most beneficial for the collective society.

For the reference of patents, private property rights are enforced and sought.

Property rights are then, by definition, any formations supported by society in order

to restrain a resource or good to one individual, organization, or government. By

acquiring property rights, the owner obtains the rights to: use the resource, earn

income from it, transfer it to others, and enforce its right of ownership.

According to John Locke, given that all men are equal, “every man has a

property in his own person” and no one else has the right to it but himself (Locke,

1689). A man’s physical labour that he produces with the use of his body is

considered to become his property. Basically, what a man is able to cultivate from his

own labour, essentially (according to Locke) becomes property of the labourer.

However, this is on condition that there are enough resources left for others to do the

same. Locke further explains that when a man or labourer contributes something

additional to nature (appropriating his labour towards it), bringing it out of the state of

nature, then the process of property begins. Locke’s theory is based on three

restrictions on accumulation of property: (1) one may only appropriate as much as

one can use before it spoils; (2) one must leave “enough and as good” for others

(sufficiency restriction); and (3) one may only appropriate property through one’s own

labor. (Locke, 1690).

If we consider a mainstream perspective on patents we have to examine Paul

Romer’s theory on economic growth, as it has been one of the main driving forces

behind the “new growth theory”. In his interview on economic growth held by Russell

Roberts in 2007, Romer talks about “the importance of ideas, the role of institutions

and the legal environment for creating incentives for new idea.” According to Romer,

the United States has been experiencing growth rates in the last couple of decades

that have clearly increased over time even though the economy must invent more

products every year to maintain a certain percentage of growth. He explains this

development by referencing the combined effects of “knowledge building on

knowledge” and the educational shift towards new discovery, accelerated by the

growth in population. In his view, institutions have been providing incentives to

individuals to engage in innovative research through research conducted in

universities as well as the issuance of intellectual property rights. In 2007, Romer

claimed that the US economy is moving towards more constricted patents, raising

the question whether this movement will hamper or spur the progress of

technological innovation. In his view, moving towards more limited patents, either in

terms of the number of issuances or the time period of validity, would hamper

innovative development as it decreases the incentives for people to invent new

products and create, by definition, innovation. The reason for this is the fact that the

innovative individual will not be able to capture most of the value or returns, leading

to a larger value to society. In order to reinforce these incentives for individuals, the

government must reward students getting additional education (science related)

through grants or vouchers, what is similar to Friedman's view. Some of these grants

should financially support educational degrees so that students can take risks and

engage in the process of developing new goods and mainly "innovating." This should

include giving firms financial incentives to innovate.

For the institutionalist view, it is important to analyze Veblen's view on patents.

Veblen makes it clear in On the Nature of Capital: Investment, Intangible Assets, and

the Pecuniary Magnate that the rights that patents "award" are detrimental in the

sense that they prevent the new knowledge to be used by the community. Following

this concept, it restrains society from the "serviceability" of innovation, as no previous

patented knowledge can be used. For Veblen, patent rights are initially seen through

this view that it does not allow society to prosper and innovate when instituted. Then,

they are seen as partially effective: "The patent right becomes effective for the

purpose only in the material working of the innovation covered by it; and monopolistic

control is a source of gain only in so far as it effectually modifies or divides the supply

of goods." (Veblen, 1908) Therefore, in a second view, patents are seen effective for

the individual creating the good, because it can properly use his knowledge without

facing competition, and obviously acquire possible monopolistic control. A primary

difference between Veblen’s take on patent roles and mainstream economic theory

is to do with the production of goods in society. For Veblen, ideally, production

should be carried out for the common good of society, while for the mainstream view,

the objective of production is more aligned with production for profit, although they do

believe that there is some natural relationship between the two, in which case

producing for profit can be seen as beneficial for society. An example of this is when

mainstream economists believe that “the incentives provided by the monopoly profits

generated by patent protection guarantee that there will be an innovative effort which

will result in more efficient production of better goods” (Fiani, 2009). However, on the

contrary, Veblen opposes this view as he believes that this relationship between

production for profits and the common good are not natural as they do not account

for any realistic alternative (pecuniary) motives.

Another important distinction that needs to be made is that of tangible and

intangible asset patenting. Tangible assets are those that are of “technological or

industrial character”, and intangible assets are, which are particularly difficult to

evaluate, include things like patents, copyrights, and trade markings.

The invention or innovation covered by the patent right is a contribution

to the common stock of technological proficiency. It may be

(immediately) serviceable to the community at large, or it may not;

[...]But, whether the innovation is useful or not, the patent right, as an

asset, has no (immediate) usefulness at large, since its essence is the

restriction of the usufruct of the innovation to the patentee. Immediately

and directly the patent right must be considered a detriment to the

community at large, since its purport is to prevent the community from

making use of the patented innovation, whatever may be its ulterior

beneficial effects or its ethical justification. (Veblen, 1908, 116)

Basically, Veblen is describing the detrimental relationship between patenting and

innovation. Veblen holds this perspective because he thinks that knew innovative

knowledge should be used for the greater benefit of the community, and in the case

of patent rights, it dramatically restricts the ‘serviceability’ of innovation.

The Austrian school of thought argues that the granting of intellectual property

rights slows rather than inspires technological innovation and thus economic growth.

As Heller & Eisenberg (1998) stress in Can Patents Deter Innovation? The

Anticommons in Biomedical Research, the economic use of patents has developed

into a phenomenon of the ”anticommons” where inventors have been subject to

underusing available resources by ‘blocking’ each other, caused by the presence of

patents. Even though the paper is more specifically concerned with the use of

patents in biomedical research, its theory can be applied to any market. This

argument goes along with Schumpeter’s view on innovation, which he claims is

endogenous. According to his theory on ‘creative destruction’ in Can Capitalism

Survive?, innovation emerges from within the existing modes of organisation and

revolutionizes it. Technological innovation makes old methods unprofitable and

creates new ones in which the entrepreneur sees an opportunity to gain a profit.

However, in the Austrian perspective, monopolies prevent creative destruction in

order to defend their economic power in the market. In order to do so, they purchase

patents preventing new entrepreneurs to enter the market. In the Austrian point of

view, with an emphasis on Schumpeter’s theory, creative destruction (capitalism)

cannot survive as long as monopolies keep gaining privileges through the central

governments and their issuance of patents.

Acs & Sanders also discussed the initial purpose of patents and their effects

on the generation of growth within an economy. Even though research has shown

that the issuance of patents has increased the rate of research (measured in

patents), theories claim that the actual “quality” of patents has decreased while their

issuance has not fulfilled the expected generation of economic growth (Jaffe and

Lerner, 2004). In Intellectual Property Rights and the Knowledge Spillover Theory of

Entrepreneurship, Acs and Sanders (2008) state that there must be an “optimum

level of protection” in a sense that too many patents issued could be “too much of a

good thing”, while an equilibrium would still enforce incentives for innovation.

Ultimately, the optimum level would resemble the peak of an inverted U-shaped

relationship among the number of issued patents and their effect on economic

growth.

Furthermore, they follow the so-called knowledge spillover theory and

emphasize their distinction between invention and innovation, including

commercialization. In their view, knowledge is created by inventors, which spills over

other participants in the market through commercialization, which is undertaken by

entrepreneurs. Even though combining these two factors go hand in hand when

generating growth is pursued, it is essential to Acs and Sanders to make a

distinction. As opposed to inventors, entrepreneurs receive a reward (commercial

rent) for investing in R&D, seeing the commercial potential of the invention, and

finally taking the risk of commercializing it. With the introduction of patents, however,

the rewards shifted over from the entrepreneur side to the inventor side, reducing the

incentives for entrepreneurs to commercialize inventions. Consequently, less

commercialization is going to hamper the spillover effect of knowledge and thereby

reduce economic growth. As Jaffe and Lerner (2004) stress, the excessive issuance

of patents in the US system has passed the ‘optimum’ balance and rents should

partially be reallocated to the entrepreneurs in order to spur more more innovation

besides invention.

Patents as Property or Monopoly Rights

Fairly known in the world of economics and related to innovation matters,

patents are also often referred as intellectual property rights (IPRs). Intellectual

property rights refer to creations of the intellect used by a monopoly that is designed

to specify ownership according to an authoritarian body. Monopoly rights are defined

as privileges granted by an authority (governmental or authoritarian individual) to a

person or entity in order to exclude all others from using, producing or selling a

certain good or service, giving them enough power to construct a monopolistic

industry around its protected good. See the resemblance? "Monopoly" rights are

called so due to the great dominance imposed in the industry originated from those.

For a long time now, these monopoly rights have been defined in a similar manner

as have patent rights and the giving sense of ownership to a good or service

considered innovative. Although, alternative economic perspectives do see this

similarity in a different manner. For example, institutionalists see that any kind of

monopoly right is also a property right, since it allows them to own the matters for

controlling of production of that good. In the view of Austrians, patent rights are not

very supported, as they believe that some kind of government intervention should be

induced in order to control the dominance awarded to these "inventors".

Patents are often mislead with property because they can be bought and sold,

as well as the fact that the patent owner has the power to exclude others from the

process of manufacturing or selling, just by using an innovative invention. Although, if

we consider the use of patents for drugs that act as the only treatments for a

disease, then they are obviously used with a monopolistic purpose. Actually,

pharmaceutical companies are known for issuing more and more patents yearly with

only monopolistic purposes. Unlike natural resources, patents are not limited,

meaning that one can innovate as often as his creative capacity allows. Following

this thought, granting patents is a process that is not limited, where no immediate

amount restraints are imposed, meaning that companies engage in a race for

growing the volume of patenting and enjoying the benefits of those.

Therefore, after analyzing the role of patents and innovative methods in

economic growth, it can be deduced that monopoly rights and property rights are

extremely similar as they conclude to the same benefits of being used for monopoly

developing purposes, instead of preserving the common rights to private property.

Bibliography

Ács, Z., & Sanders, M. (2008). Intellectual property rights and the knowledge

spillover theory of entrepreneurship. Jena Economic Research Papers, 2008(69).

Retrieved April 26, 2016.

Bush, P. D. (1987). The theory of institutional change. Journal of Economic Issues,

21(3), 1075-1116

Fiani, R. (2009). The trend towards international harmonization of patents' protection

and its problems. Revista de Economia Politica, Rio de Janeiro, RJ.

Foster, J. F. (1961). The effect of technology on institutions. Journal of Economic

Issues, 15(4), 907-913

Grossman, G. M., & Helpman, E. (1991). Innovation and growth in the global

economy. Cambridge, MA: MIT Press.

Heller, M. A., & Eisenberg, R. S. (1998). Can Patents Deter Innovation? Science,

280(5364), 698-701.

Jaffe, A. and J. Lerner (2004). Innovation and its Discontents: How our Broken

Patent System is Endangering Innovation and Progress, and What to Do About It .

Princeton University Press, Princeton, NJ.

Locke, J. (1689). Two treatises of government (Vol. 1). Chicago, IL: The University of

Chicago Press.

Locke, J. (1689). Two treatises of government (Vol. 1). Chicago, IL: The University of

Chicago Press.

Romer, P. M. (1990). Endogenous technological change. Journal of Political

Economy, 98(5), 71-102

Romer, P. M. (1990). Endogenous technological change. Journal of Political

Economy, 98(5), 71-102

Romer, P. M. (1989). Increasing returns and new developments in the theory of

growth. National Bureau of Economic Research, (3098)

Schumpeter, J. A.. (1947). The Creative Response in Economic History. The Journal

of Economic History, 7(2), 149–159.

Schumpeter, J. A., & Opie, R. (1934). The theory of economic development; an

inquiry into profits, capital, credit, interest, and the business cycle. Cambridge, MA:

Harvard University Press.

Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly

Journal of Economics, 70(1), 65-94

Veblen, Thorstein (1898). The Beginnings of Ownership. University of Chicago

Press. American Journal of Sociology, Vol. 4, No.3 (Nov., 1898), pp. 352-365

Veblen, Thorstein (1904). The Theory of the Business Enterprise. New Brunswick,

New Jersey: Transaction Books.