Will Stronger Intellectual Property Rights Increase International Technology Transfer? Empirical Evidence from U.S. Firm-Level Panel Data

National Bureau Of Economic Research Inc, Cambridge MA

Investigators

Abstract

Despite the dedicated efforts of many respected scholars over the last 20 years, the international impact of intellectual property rights (IPR) remains an understudied area within international economics. The proposed study will take a novel approach to the analysis of the impact of changing IPR regimes on innovation and international technology transfer. Over the past two decades, a number of countries undertook extensive unilateral reform of their IPR systems, often in response to diplomatic pressure from the United States or other major trading partners. By employing data from the Bureau of Economic Analysis's survey of U.S. multinational activity, this study will be able to examine the responses of individual multinational enterprises to a series of these reasonably well-documented recent IPR regime changes. The use of firm-level data on exports, investment, affiliate sales, and, especially, technology transfer abroad provides the authors with a number of dimensions of variation within which we can explore these issues. In principle, one can observe the same firm responding to various kinds of IPR reform in different countries, allowing for much better measurement the differential impact of national characteristics and particular aspects of patent reform on the variables of interest. This wealth of data will allow this study to avoid many of the problems that have plagued previous efforts. This improved empirical approach has the potential to deepen understanding of the effects of IPR on firm-level decisions and further inform the current policy debate over the manner in which recent and highly controversial international treaties on intellectual property rights should be implemented. The most significant of these treaties, The TRIPs (Trade-Related Aspects of Intellectual Property Rights) Agreement, concluded in the 1990s, requires a large number of developing countries to strengthen their patent and other intellectual property rights (IPR) systems. While some signatory states still have several years to fully comply with the terms of TRIPs, there is already sharp disagreement between developing and developed nations concerning the impact of TRIPs. Many policymakers in developing nations believe that the policy changes mandated by TRIPs will work against their national economic interests, transferring rents to multinational corporate patentholders headquartered in the world's most advanced countries, especially the United States. Advocates for strong IPR counter that strengthening IPR in developing countries will induce more innovation, both in the developing world and in the developed world, fostering more rapid economic growth. These advocates also believe that a strengthening of IPR will accelerate the transfer of technology from the developed world to the developing world, ensuring a relatively equal distribution of gains from this policy change. As important as this debate is, the competing claims of the opposing sides have been insufficiently grounded in empirical research. By examining the response of multinational firms to international IPR agreements that predated TRIPs, this study will provide invaluable evidence to guide the ongoing international policy debate.