Innovation in the Mining Sector and Cycles in Commodity Prices
Economic Research Working Paper No. 55
Author: Mr. David Humphreys
Author: Mr. Julio Raffo
Author: Ms. Alica Daly
Author: Ms. Giulia Valacchi
Publication year: 2019
This paper analyses the evolution of innovation in the mining sector and how this innovation responds to the economic environment, in particular to changes in commodity prices. For this purpose, we combine commodity price data with innovation data as proxied by patent filings extracted from a novel unit record database containing comprehensive patent and firm level data for the mining sector from 1970 to 2015. We include patents registered both by mining companies and mining equipment, technology and service (METS) firms. With a multi-country panel analysis, we find that innovation in the mining sector is cyclical. Innovation increases in periods of high commodity prices while decreasing during commodity price recessions. Our results suggest that innovation increases mostly with long price cycle variations, while mostly unaffected by medium and short cycles. METS related innovation seem the driving force of this mechanism. In contrast, countries specializing in mining industries are found to be slower in reacting to price changes.