Abstract
This is the first paper that analyzes for a global sample of countries how trade agreements that include technology-related provisions impact exports of goods, and how this impact differs depending on the technology content of the goods. It includes estimations of a structural gravity model for a panel of 176 countries over the period 1995–2015. The model differentiates between provisions relating technology transfer, technical cooperation, research and development, and patents and intellectual property rights. It also estimates the differences in these effects depending on whether the trade flow in question is between countries with similar or different levels of development. The main results indicate that regional trade agreements (RTAs) that contain technology provisions generate a significantly higher volume of trade than RTAs that do not, after controlling for the depth of the RTAs. For countries that ratify RTAs that include such provisions, it is exports of technology-intensive goods that increase the most. Trade agreements including such provisions have a heterogeneous effect that varies by income level of the trading partners and depends on the extent to which the RTA incorporates other provisions.
Highlights
Since the 1990s, the defining feature of international economic relations has been the proliferation of trade agreements, which have filled what Bhagwati (1995) described as the “spaghetti bowl” to the brim
Including innovation provisions for direct technology transfer in regional trade agreements (RTAs) has different effects on exports depending on the direction of trade, the level of development of the countries of origin and destination, and the type of clause included in the agreement
The main results of this study indicate that RTAs that contain technology-related provisions generate a significantly higher aggregate volume of trade than RTAs that do not, after controlling for the depth of the agreements
Summary
Since the 1990s, the defining feature of international economic relations has been the proliferation of trade agreements, which have filled what Bhagwati (1995) described as the “spaghetti bowl” to the brim. Focused on the trade effects of IPR-related provisions in RTAs (Campi & Dueñas,2 2019; Chelala and Martínez-Zarzoso, 2017; Dhingra et al, 2018; Maskus and Ridley, 2019), disregarding the fact that the provisions include technology transfer cooperation, technical assistance and joint R&D projects These papers cover a limited number of RTAs. We seek to extend the existing empirical literature in three directions. We are able to isolate the effect of the technology-type provisions by controlling for the depth of the RTAs, the participation of the signatory countries in the TRIPs agreement, and membership of the World Trade Organization (WTO) and currency unions If any of these factors were excluded from the model, it could generate biases in the estimation of the main effect. We contribute to the cited literature by using a global sample of countries, applying an enhanced econometric methodology and considering a finer classification of technology-related provisions than in previous studies
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