Patterns of factor-saving innovation in the industrialized world

An attempt is made in this study to empirically measure the impact of factor endowment on innovation trends. A large international sample of significant innovations was used, wherein each innovation is classified according to its perceived factor-saving impact, as seen by the innovating firm, the user and industry/market observers. Then, broad trends in labor-, material- and capital-saving innovation were measured in eight European nations, the United States, United Kingdom and Japan. International variations in these trends were correlated with international variations in relative factor cost levels. A very high degree of correlation was found, supporting the position that factor endowment significantly influences innovation trends in the industrialized world.