There is abundant evidence from economics and history that the world’s wealthy countries grew rich because they had well-developed systems of private property. Clearly defined and impartially enforced property rights were crucial to economic development; they facilitated trade, trade allowed individuals and business enterprises to specialize, specialization made individuals and business enterprises more productive, and more productive firms and individuals in the aggregate raised national income. Innovation and economic growth, in short, emerged out of property systems that allowed economies to operate as a web of contracts. The origin of these ideas go back to Adam Smith’s The Wealth of Nations, but they were subsequently elaborated upon by Douglass C. North in 1981, Daron Acemoglu and James A. Robinson in 2012, and other scholars who made explicit the connection between property rights and the incentives to transact.
Read the paper: Patents and the Wealth of Nations