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Are National Patent Laws the Blossoming Rain?

Listed author(s):
  • Yi Qian
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    Research on the effects of patent protection on innovation and technology transfer in the cross-country pharmaceutical industry adds to our understanding of the underlying forces driving a country's innovation level. Qian (2007) constructs a comprehensive database useful for evaluating the patenting effects on pharmaceutical innovations for 26 countries that established national pharmaceutical patent laws during the period from 1978 to 2002. This paper is a companion piece that extends the research to evaluating the effects of patent reforms on inward foreign direct investment (FDI) establishments and imports in the pharmaceutical sectors. This book chapter also attempts to integrate all the findings on innovations, technology transfer, and international trade, and discuss potential policy implications. By thoroughly controlling for the country covariates, through a combination of matched sampling techniques with fixed-effect panel regression models, the analyses arrive at robust results across the various model specifications. First, national pharmaceutical patent protection alone does not stimulate domestic innovation, as estimated by the US patent awards (both raw counts and citation-weighted) and domestic R&D. FDI establishments and pharmaceutical exports did not increase significantly either. Imports, however, did flourish. Second, national patent law implementation demonstrates conditional importance for innovation acceleration and technology transfer, conditional upon certain country variables. In particular, the interaction between implementation and the development level, educational attainment, and economic freedom index are shown to have positive relationships with the domestic R&D expenditure and domestic pharmaceutical patent awards in the US. The interaction between implementation and economic freedom, implementation and educational attainment are indicated to attract more FDI establishments. Third, terms of trade is likely to decline immediately upon the new implementation of IPR.

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    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16295.

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    Date of creation: Aug 2010
    Publication status: published as “Are National Patent Laws the Blossoming Rain? – Evidence from Domestic Innovation, Technology Transfers, and International Trade Post Patent Implementations from 1978-2002,” in Netanel, Neil (Ed.), The Development Agenda: Global Intellectual Property and Developing Countries. 2009, Oxford University Press, London.
    Handle: RePEc:nbr:nberwo:16295
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    1. Petra Moser, 2005. "How Do Patent Laws Influence Innovation? Evidence from Nineteenth-Century World's Fairs," American Economic Review, American Economic Association, vol. 95(4), pages 1214-1236, September.
    2. 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.
    3. Nancy T. Gallini, 1992. "Patent Policy and Costly Imitation," RAND Journal of Economics, The RAND Corporation, vol. 23(1), pages 52-63, Spring.
    4. Harabi, Najib, 1995. "Appropriability of technical innovations an empirical analysis," Research Policy, Elsevier, vol. 24(6), pages 981-992, November.
    5. James Bessen & Eric Maskin, 2009. "Sequential innovation, patents, and imitation," RAND Journal of Economics, RAND Corporation, vol. 40(4), pages 611-635.
    6. Ha-Joon Chang, 2001. "Intellectual Property Rights and Economic Development: Historical lessons and emerging issues," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 2(2), pages 287-309.
    7. Kumar, Nagesh, 1996. "Intellectual property protection, market orientation and location of overseas R&D activities by multinational enterprises," World Development, Elsevier, vol. 24(4), pages 673-688, April.
    8. Mariko Sakakibara & Lee Branstetter, 1999. "Do Stronger Patents Induce More Innovation? Evidence from the 1988 Japanese Patent Law Reforms," NBER Working Papers 7066, National Bureau of Economic Research, Inc.
    9. Jean O. Lanjouw & Iain Cockburn, 2000. "Do Patents Matter?: Empirical Evidence after GATT," NBER Working Papers 7495, National Bureau of Economic Research, Inc.
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