Abstract
AbstractThis paper addresses the question of whether expanded and strengthened protection of intellectual property (IP) rights fosters technology transfer to developing countries, which is one of t...
Highlights
In 2010, 70% of patent applications filed worldwide originated in high-income economies, whereas lower-middle-income and low-income economies combined contributed less than 4%. 1 in developing countries, productivity growth relies heavily on the successful adoption and adaptation of foreign technology.The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) was conceived with the objective to “contribute to the [...] transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare” (GATT 1994).2 Twenty years later, it is still the subject of vigorous debate whether intellectual property standards facilitate or impede technology transfer
We find evidence that the environment in which a firm operates moderates the relationship of IP protection and firm-level technology licensing: while going from no IP protection to maximum IP protection is associated with a 47% increase in the predicted probability of licensing foreign technology for firms operating in upper-middle-income countries, there is at best no significant correlation for firms operating in lower-middle-income and lowincome countries
The relationship between intellectual property protection and cross-country technology licensing has been a widely debated issue since IP made its début in international trade with the TRIPS Agreement
Summary
In 2010, 70% of patent applications filed worldwide originated in high-income economies, whereas lower-middle-income and low-income economies combined contributed less than 4%. 1 in developing countries, productivity growth relies heavily on the successful adoption and adaptation of foreign technology. Stronger intellectual property (IP) protection consolidates the monopoly power of patent holders, which makes it costlier for firms in developing countries to license foreign technology, reducing follow-on innovation in the developing world. Helpman (1993) provides a useful framework to study the effect of tighter IP protection on less developed economies, his findings are not necessarily robust to model specification. Glass and Saggi (2002) present a product cycle model in which innovation, imitation, and FDI are endogenous, but they find that the increased difficulty of imitation reduces both FDI and innovation in the South Both Yang and Maskus (2001b), and Dinopoulos and Segerstrom (2010) find positive effects of stronger IP rights on North–South technology transfer.
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