Key Sectors of Innovation

One way to proxy the outcome of the R&D process is to count the number of patents a firm has generated. However, there are several problems with the use of the num-ber of patents as an indicator of R&D-output (Griliches, 1990). However, the correla-tion between changes in R&D spending and generated patents is quite high (Pakes and Griliches, 1984). Different uses of patents as indicators of technological progress range from ‘simple ’ patent counts (Johnson et al., 1995) to the use of ‘specific ’ input-output techniques to measure the interaction between sectors in the innovative process. The purpose of this paper is to examine whether the techniques that are applied to input-output tables can also be used for the typical analysis of the specific data on patents and innovations. The data used in this study denote make and use of patents or innovations by sector. By applying the techniques developed, it is possible to pinpoint the sectors that are the most important for innovative activities and the sectors that generate the highest number of patents due to interaction with other sectors. Since these specific data are scarce only Canada is investigated empirically