Standard essential patents and global ICT value chains with a focus on the catching-up of China

Patents, standards and their combination, standard-essential patents (SEPs), are important in the information and communication technology (ICT) sector, in particular in mobile communication. We argue that SEPs are relevant in macroeconomic development and estimate the effect of a country's SEP portfolio on its value-added trade in global ICT value chains (GVC). We find that SEPs retain a higher share of value-adding domestically and that absorptive capacity is needed to join GVCs. China entered the SEP market late and is catching up rapidly. The trade effect of SEPs on China is different from that on matured economies because of the initially low value of its SEPs.

Automated summary

Patents, standards, and their combination, known as standard-essential patents (SEPs), play a crucial role in the ICT sector, particularly in mobile communication. This study highlights the significance of SEPs in macroeconomic development and investigates the impact of a country's SEP portfolio on its value-added trade in global ICT value chains. The findings reveal that SEPs contribute a higher proportion of domestic value-added, and that absorptive capacity is necessary for participation in value chains. China, although a late entrant in the SEP market, is rapidly catching up. However, the trade effect of SEPs on China differs from that of matured economies due to the initially low value of its SEPs.