Global fragmented production and associated trade in intermediate products has changed how economists study globalization and how new public policies are shaped. This creates a need for understanding cross-border flows of disembodied knowledge, often associated with intellectual property (IP). However, data on these international IP-related knowledge flows, specifically, cross-border payments for use of IP, are distorted. The chapter shows how tax planning by multinational enterprises has seriously distorted the measurement of cross-border IP flows, with tax-induced mismeasurement potentially exceeding 35% of global Charges for Use of Intellectual Property (CUIP), and more for individual countries, particularly high-tax-rate countries. This chapter describes the trend of increased cross-border trade in ideas, assessing the main data sources and distortions to these flows. The chapter analyses the tax effects on cross border IP measures and the magnitudes and trends in the tax distortions. It concludes with some possible avenues for reducing mismeasurement distortions, directed at national statisticians, national tax administrations, policymakers and analysts, and academics.

Universities and public research institutes are encouraged to collaborate with industries and promote knowledge transfer from academia to the private sector in order to promote commercialization of inventions and to foster innovations that would facilitate economic growth. Patenting research outputs is one way of facilitating this knowledge transfer. This chapter focuses on tracking patenting as a way of measuring performance of public research organizations. The chapter proposes how patent filings across different countries using patent data filed through the Patent Cooperation Treaty can be captured and compared and how national-level patent data can be compiled using the PATSTAT database. The chapter shows that global patenting by public research institutions and universities has increased in the last thirty-five years, with patenting dominance shifting from Europe and the United States to Asia. It shows that while private sector businesses continue to play a major role in global patenting, public research organizations are emerging as important innovation drivers. The chapter concludes that while there are limitations in using patent data and the extent to which it measures innovativeness, these data are still useful in helping to identify potential weaknesses and highlight strengths of public research organizations.

Commercialization of public research to support economic growth involves the transfer of knowledge produced by public research organizations to private sector businesses or government agencies. This chapter describes the diverse range of national and institutional policies and practices implemented across countries to encourage knowledge transfer between public research organizations and firms. The chapter largely focuses on the IP licensing model, highlighting its advantages and disadvantages, and discusses how the costs of IP-mediated knowledge transfer can be minimized. It outlines the main reasons for collecting knowledge transfer metrics for licensing – for benchmarking, for identifying factors that support or hinder knowledge transfer, and for informing policy. The chapter also identifies the most commonly used methods for collecting knowledge transfer metrics, and discusses basic metrics that all countries should collect on the IP licensing model, plus supplementary metrics of relevance to specific policy issues.

Public research and development plays a crucial role in technological advances and development and indirectly contributes to economic growth. Business sectors depend on public research to produce innovations of commercial significance, and many countries have, since the late 1970s, changed their legislation to regulate or facilitate IP ownership and promote increased commercialization of the results of public research. These “third mission” policies were intended to increase the economic effect of public investments in research and development. Maximization of the economic impact of academic research will happen only when the private sector uses and builds on research done in the public sector and when industrial research complements and also guides basic research. The chapter explores cross-country trends in public research and development and outlines the challenges faced by high, middle- and low-income countries in increasing their research and development and knowledge transfer capabilities.