Revisiting the impact of TRIPS on trade: Evidence from staggered difference-in-differences

This paper uses an extended two-way fixed effects (ETWFE) estimator for staggered difference in-differences to evaluate the impact of compliance with the 1995 agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) on international trade. Utilizing various partial aggregation schemes to summarize treatment effect heterogeneity across different dimensions, we provide evidence that: (i) On average, compliance with the TRIPS agreement have led to an increase of about 58 in trade among member countries; (ii) Our results demonstrate significant heterogeneity across treatment-timing cohorts, with relatively larger effects observed for those that complied with the agreement earlier; (iii) The event-study estimates suggest that trade flows exhibit a sustained positive response to TRIPS, rising for about 11 years since the agreement's inception before eventually declining; (iv) The conclusions based on aggregate trade flows remain valid across different industries that exhibit greater sensitivity to intellectual property. In so far, the existing literature have largely relied on conventional two-way fixed effects (TWFE) regressions, which may yield biased estimates in a setting with staggered treatment adoption and treatment effects heterogeneity. The contribution of this paper is to use the recent heterogeneity-robust difference in-differences methods to address the trade effects of TRIPS due to its staggered pattern of compliance.