Determinants of the United States’ trade of pharmaceuticals
The United States spearheaded the movement for the globalization of patent protection. Over the past years, it has been pushing for the protection of strong intellectual property rights in multilateral and bilateral agreements, treaties and negotiations. The pharmaceutical industry insists that foreign patent protection should not be a barrier to access to pharmaceuticals in developing countries and should increase trade. The industry argues that other factors are necessary for poor countries to have access to drugs, such as adequate infrastructure and political will. Has foreign patent protection increased the United States’ trade of pharmaceuticals? A gravity model using panel data from 1993 to 2007 shows that foreign patent protection is not a strong determinant of the United States imports and exports of pharmaceuticals. An OLS estimation, a Tobit estimation and a zero-inflated negative binomial estimation show that other factors are more important determinants of trade, such as the health care system, government expenditure on health and the quality of infrastructures. The United States’ President’s Emergency Plan For AIDS Relief is also a significant determinant of the country’s pharmaceutical exports. The only significant increase in U.S. imports linked to foreign patents concerns Asian countries that have implemented strong protection.
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