Intellectual Property Rights, Technology Transfer and International Trade

46 Pages Posted: 14 Jul 2021

See all articles by Ana Maria Santacreu

Ana Maria Santacreu

Federal Reserve Banks - Federal Reserve Bank of St. Louis

Multiple version iconThere are 2 versions of this paper

Date Written: July 12, 2021

Abstract

I study the short- and long-term effects of regional trade agreements (RTA) with strict intellectual property (IP) provisions. An empirical analysis using gravity methods suggests that regions signing these agreements share more technology in the form of technology licensing following the year of enforcement. I set up a multi-country model with endogenous productivity through innovation and adoption to quantify the effect of such agreements on innovation, growth and welfare. Adopters pay royalties to innovators for the use of their technology; the model allows for various degrees of IP rights enforcement ranging from pure imitation to perfect enforcement of IP rights. An improvement of IP protection in exchange for market access increases welfare, growth and innovation in the world. Developed countries benefit from a higher return to innovation and a lower home trade share, accruing welfare gains both in the short and long term. Developing countries are impacted through three channels: (i) internal IP reforms increase the return to domestic innovators,(ii) lower trade costs increase profits from exports, and (ii) higher royalty payments reduce the return to adopters. A counterfactual exercise shows that while the first two forces dominate in the long run, there are short-term losses from a lower return to adoption.

Keywords: Technology Licensing, Regional Trade Agreements, Intellectual Property Rights

JEL Classification: F12, O33, O41, O47

Suggested Citation

Santacreu, Ana Maria Maria, Intellectual Property Rights, Technology Transfer and International Trade (July 12, 2021). Available at SSRN: https://ssrn.com/abstract=3885234 or http://dx.doi.org/10.2139/ssrn.3885234

Ana Maria Maria Santacreu (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of St. Louis ( email )

411 Locust St
Saint Louis, MO 63011
United States

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