The Middle Way: A Disciplined Approach to Innovation and International Patenting Strategies

Many governments aim to increase national wealth through global trade. The emerging literature highlights that one specific aspect of global trade—patenting in foreign lands—plays a crucial role in nations’ pursuit of economic prosperity. However, a nuanced understanding of how different characteristics of outward-bound patent portfolios relate to varying income levels across countries is lacking. This article addresses that gap. Using methods inspired by the revealed comparative advantage literature, we develop a set of analytical tools with significant capacity to assess the breadth, depth and overall strength of international patent portfolios for a data set of 202 countries from 2000 to 2018. The results reveal the extent to which countries from four income groups (high, upper-middle, lower-middle and low income) either specialise in specific technologies or diversify their portfolios across various inventions. Based on these empirical findings, we propose the Middle Way theory of incremental technological growth. Our conceptual framework can be applied to national technological and trade promotion policies, aligning them with patent protection abroad. This alignment aims to maximise domestic economic gains from foreign trade under limited national resources.