selected among the high-income countries with a GNP per capita above $25,000 were the USA, Germany, Japan, France and Italy. The middle-income countries selected, with a GNP per capita of $5000 - $25,000, were Botswana, Brazil, South Korea, Poland, the Russian Federation and South Africa. From low-income countries with a GNP per capita below $5,000, we selected Bolivia, China, India, Indonesia, Kenya, Morocco and the Philippines. In making this selection we also sought to represent a diverse range of geographies in order to avoid focusing on a single region. While data on licenses and royalties received was available for all countries, it was not possible to get comprehensive data relating to all stocks of patents and trademarks in all of the selected countries. Despite this limitation, our findings suggest that global licensing revenues continue to grow. However, revenues remain unequally distributed across nations. Interestingly, the gap in licensing revenues is stronger than the gap in patent ownership. Though the growth in licensing revenues can be seen as an indicator of the greater efficiency of technology utilization, we still observe strong differences in the global distribution of licensing revenue.

In table 1 below (ranked according to license fees received), high-income countries are marked in violet, middle-income countries are marked in red and low-income countries are marked in black. The IMF data used in this classification is not ideal because it reflects licensing and royalty revenues received from a range of forms of intellectual property and intellectual capital (IC), such as patents, trademarks, business franchises and copyright. The figures do not indicate the proportion of revenue and payments attributable to patents alone. The share of patents in the licensing and royalty figures is unlikely to be homogeneous across all countries. This complicates cross-country comparison of licensing fees and patent application data. Balance of payment data for license fees can also be misleading because it captures many intra-firm transactions that are not specifically tied to knowledge creation and patent monetization. For example, a country may have a high level of receipts because of a favorable tax environment or because of the prevalence of profit-shifting techniques such as transfer pricing. Finally, the quality of patents is very likely to vary across countries and is significant in determining the amount of IP revenues. All of these points are important limitations to the conclusions that can be drawn from this data. However, it is the best data currently available worldwide and it still offers valuable insights on capital flows associated with various forms of IP and IC. While certainly not sufficient to establish a causal relationship between patent ownership and licensing revenue, it provides a useful illustration of the IP commercialization divide. It is an interesting fact in itself that the only data available on monetary streams associated with IP does not offer clearly disaggregated indicators. This may reflect a lack of awareness regarding the need to grasp the value of IP in terms of its commercial relevance. The majority of existing innovation indexes continue to measure innovation output primarily in terms of patents held rather than according to the economic value of those patents. This is unfortunate because it suggests to policy makers in the developing world that stimulating higher levels of patent filings is sufficient to foster domestic innovation. Patent quality, discussed later, is an equally significant concern.

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