How Stronger Protection of Intellectual Property Rights Affects International Trade Flows

24 Pages Posted: 20 Apr 2016

See all articles by Carlos Primo Primo Braga

Carlos Primo Primo Braga

IMD; Fundação Dom Cabral

Carsten Fink

World Bank - Development Research Group (DECRG)

Date Written: February 1999

Abstract

Considerations of political economy favor higher standards of protection for intellectual property rights. But does stronger protection of intellectual property rights have a positive impact on international trade flows? Yes in the case of nonfuel trade in general, but no evidence is found for trade in high-technology goods.

Intellectual property rights affect international trade flows when protected goods move across national boundaries. And intellectual property rights have grown in importance as the share of knowledge-intensive or high-technology products in international trade has doubled (from 12 percent in 1980 to 24 percent in 1994).

Fink and Braga report new evidence about how protecting intellectual property rights affects international trade flows of nonfuel trade products. Employing a gravity model of bilateral trade, they estimate the effects of increased protection on a cross-section of 89 x 88 countries. To address estimation problems associated with zero trade flows between countries, they adopt a bivariate distributed probit regression model. Their results confirm previous findings: Stronger protection of intellectual property rights increases bilateral trade flows of manufactured nonfuel imports.

But the results do not hold for trade flows in high technology, where the effect of protecting intellectual property rights was found to be insignificant.

This paper - a joint product of the Science and Technology Thematic Group and the Energy, Mining, and Telecommunications Department - is part of a larger effort in the Bank to assess the impact of intellectual property rights on economic development.

Suggested Citation

Primo Braga, Carlos Alberto and Fink, Carsten, How Stronger Protection of Intellectual Property Rights Affects International Trade Flows (February 1999). World Bank Policy Research Working Paper No. 2051. Available at SSRN: https://ssrn.com/abstract=569254

Carlos Alberto Primo Braga (Contact Author)

IMD ( email )

Ch. de Bellerive 23
P.O. Box 915
CH-1001 Lausanne
Switzerland

Fundação Dom Cabral ( email )

Avenida Princesa Diana 760, Alphaville
Nova Lima, 34000000
Brazil

Carsten Fink

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

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