The impact of intellectual property rights protection on low-carbon trade and foreign direct investments

Abstract

Climate negotiations on low-carbon technology transfer have largely revolved around the role of intellectual property rights (IPR). Some countries consider a strong IPR regime to be a necessary condition for technology transfer, while others argue that it limits developing countries' access to affordable green technologies. We contribute to this discussion by assessing the effect of IPR protection on the two main channels of international low-carbon technology transfer, namely trade in low-carbon capital goods and foreign direct investment (FDI) by firms owning low-carbon technologies. Our data describe transfer through these channels among 140 countries in eight climate-friendly technology areas between 2006 and 2015. We find that stronger IPR protection in recipient countries increased transfer in six technology areas (solar PV, solar thermal, wind, heating, lighting, and cleaner vehicles), while the effect is statistically insignificant in the other two (hydro and insulation). The results differ slightly when focusing on the case of non-OECD countries. Stricter IPRs did not have a statistically significant impact on trade in low-carbon capital goods, but they accelerated FDI in almost all low-carbon technology areas.