Innovation and International Trade

Innovation and International Trade

Innovation is the action or act of innovating, that is, modifying customs, models, legislations, products or processes. Renewal or create a novelty. Innovation and International trade have a very close relationship.

The concept of innovation is broad and can be used in all sectors, be it academic, business, environmental or economic. In this sense, the act of innovating means the need to create different ways or strategies, by the usual means, to achieve a certain goal. To innovate is to invent, whether ideas, processes, tools or services.

For Joseph Schumpeter (economist, 1883-1950), innovation is the process of creating the new and destroying what is becoming obsolete. It is the company’s ability to overcome perfect competition by establishing a temporary monopoly situation by creating a new market for its products.

Innovation and International Trade

And where do we find the connection between Innovation and Export?

The more innovative a country is, the more products and services it can make available in the global marketplace, overcoming perfect competition and creating a temporary monopoly situation. The theory of economic growth also has an export cause, because economic growth only occurs as a result of productivity or export.

There is no magic. Countries only also have Economic Growth if they increase their Productivity and/or increase their Exports.

In the image above we can see the 10 countries that most filed patent applications for innovative products and services in 2020:

China                                     68,923

United States of America   58,477

Japan                                    50,578

Republic of Korea               20,045

Germany                               18,499

France                                    7,782

United Kingdom                    5,889

Switzerland                            5,119

Sweden                                  4,351

Netherlands                           3,996

You can see the complete list in the WIPO.

Just to record the disparity and comparison, Brazil had only 691 patent registrations in 2020.

It is no coincidence that these same countries with the most patent applications for innovative products and services were also the most exporting countries on the planet in 2020.

Innovation and International Trade. It is important that the countries, especially the least developed countries, have to work harder to generate Programs and Projects to improve Innovation – and consequently improve their Productivity and Exports.

(Alfredo Kleper Lavor, economist)

Image: www.intradebook.com