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Intellectual Property Protection and Patterns of Trade

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  • Jade Vichyanond

    (Princeton University)

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    Abstract

    The paper provides a simple theoretical model for understanding how the difference in the level of intellectual property rights protection determines trade patterns. In particular, I examine how countries ?levels of patent rights protection affect exports in industries with different degrees of reliance on innovation. In contrast to most models of institutional comparative advantage, which predict that countries with superior institutions specialize in industries that are very dependent on institutions, I show that higher patent rights protection does not necessarily lead to specialization in industries that rely heavily on innovation. There may exist a threshold beyond which occurs a reversal of specialization patterns, a consequence of monopoly power inherent in intellectual property rights protection. I then use the model?s implications to assess empirically whether such predicted patterns hold in cross-country trade data and fi?nd evidence for general patterns of specialization as well as a reversal of such patterns among countries with high levels of patent rights protection.

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    File URL: http://www.princeton.edu/ceps/workingpapers/197vichyanond.pdf
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    Bibliographic Info

    Paper provided by Princeton University, Department of Economics, Center for Economic Policy Studies. in its series Working Papers with number 1201.

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    Date of creation: Nov 2009
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    Handle: RePEc:pri:cepsud:197vichyanond

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    Related research

    Keywords: intellectual property rights; trade patterns; patent rights;

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    References

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    1. Maskus, Keith E. & Penubarti, Mohan, 1995. "How trade-related are intellectual property rights?," Journal of International Economics, Elsevier, vol. 39(3-4), pages 227-248, November.
    2. Bekaert, Geert & Harvey, Campbell R. & Lundblad, Christian, 2005. "Does financial liberalization spur growth?," Journal of Financial Economics, Elsevier, vol. 77(1), pages 3-55, July.
    3. Alejandro Cuñat & Marc J. Melitz, 2007. "Volatility, Labor Market Flexibility, and the Pattern of Comparative Advantage," NBER Working Papers 13062, National Bureau of Economic Research, Inc.
    4. Nathan Nunn, 2005. "Relationship Specificity, Incomplete Contracts and the Pattern of Trade," International Trade 0512018, EconWPA.
    5. Manova, Kalina, 2008. "Credit constraints, equity market liberalizations and international trade," Journal of International Economics, Elsevier, vol. 76(1), pages 33-47, September.
    6. Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert W. Vishny, 1997. "Legal Determinants of External Finance," NBER Working Papers 5879, National Bureau of Economic Research, Inc.
    7. Smith, Pamela J., 1999. "Are weak patent rights a barrier to U.S. exports?," Journal of International Economics, Elsevier, vol. 48(1), pages 151-177, June.
    8. Keith E. Maskus, 2000. "Intellectual Property Rights in the Global Economy," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 99.
    9. Durlauf, S.M. & Johnson, P.A., 1995. "Multiple Regimes and Cross-Country Growth Behavior," Working papers 9419r, Wisconsin Madison - Social Systems.
    10. Costinot, Arnaud, 2007. "On the Origins of Comparative Advantage," University of California at San Diego, Economics Working Paper Series qt07g7g8h8, Department of Economics, UC San Diego.
    11. Dornbusch, Rudiger & Fischer, Stanley & Samuelson, Paul A, 1977. "Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods," American Economic Review, American Economic Association, vol. 67(5), pages 823-39, December.
    12. Arnaud Costinot, 2009. "An Elementary Theory of Comparative Advantage," NBER Working Papers 14645, National Bureau of Economic Research, Inc.
    13. Lee G Branstetter & Raymond Fisman & C. Fritz Foley, 2006. "Do Stronger Intellectual Property Rights Increase International Technology Transfer? Empirical Evidence from U. S. Firm-Level Panel Data," The Quarterly Journal of Economics, MIT Press, vol. 121(1), pages 321-349, 02.
    14. John Romalis, 2004. "Factor Proportions and the Structure of Commodity Trade," American Economic Review, American Economic Association, vol. 94(1), pages 67-97, March.
    15. Andrei A. Levchenko, 2004. "Institutional Quality and International Trade," IMF Working Papers 04/231, International Monetary Fund.
    16. Ginarte, Juan C. & Park, Walter G., 1997. "Determinants of patent rights: A cross-national study," Research Policy, Elsevier, vol. 26(3), pages 283-301, October.
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    Cited by:
    1. Josheski, Dushko & Koteski, Cane, 2011. "The causal relationship between patent growth and growth of GDP with quarterly data in the G7 countries: cointegration, ARDL and error correction models," MPRA Paper 33153, University Library of Munich, Germany.

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