Localization Barriers to Trade: Threat to the Global Innovation Economy

Abstract

Countries’ use of localization barriers to trade (LBTs) — policies that seek to explicitly pressure foreign enterprises to localize economic activity in order to compete in a country’s markets — have grown dramatically. But LBTs such as forced local production or forced technology or intellectual property transfer as a condition of market access harm the global innovation economy, the countries affected by them, and even the very countries that implement them, all while detracting countries’ from focusing on implementing productivity and innovation-based policies that could deliver stronger, more sustained economic growth. This report documents the growing global use of LBTs — and explains what to do about it.

Keywords: Trade, Localization Barriers, Innovation, Competitiveness