  How does technological interdependence affect a sector's ability to innovate?
This paper answers this question by looking at knowledge interdependence
(knowledge spillovers and technological complementarities) and structural
interdependence (intersectoral network linkages). We examine these two
dimensions of technological interdependence by applying novel methods of text
mining and network analysis to the documents of 6.5 million patents granted by
the United States Patent and Trademark Office (USPTO) between 1976 and 2021. We
show that both dimensions positively affect sector innovation. While the impact
of knowledge interdependence is slightly larger in the long-term horizon,
positive shocks affecting the network linkages (structural interdependence)
produce greater and more enduring effects on innovation performance in a
relatively short run. Our analysis also highlights that patent text contains a
wealth of information often not captured by traditional innovation metrics,
such as patent citations.
