How the West Has Won: Regional and Industrial Inversion in U.S. Patent Activity

Abstract

While it is clear that there has been a “regional inversion” in American patent activity over the past 25 years (i.e., relative rise of the Northwest and Southwest at the expense of the traditional invention hotbeds of the Northeast and Midwest), the reason is still open to speculation. Theory suggests that it can be explained by some combination of changing demographics and industrial composition. We introduce constant market share analysis, typically used only in international trade theory, offer a new extension to this tool, and conclude that industrial shifts have accounted for almost half the regional inversion among states. The results of the regression analysis show how the West capitalized upon the shift via demographics and policy variables, whose importance varies with the planning horizon.

Keywords:

• invention
• geography
• clustering
• regional inversion
• constant market share analysis