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How stronger protection of intellectual property rights affects international trade flows

  • Fink, Carsten
  • Braga, Carlos A. Primo

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). The authors 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 mode. Their results confirm previous findings: stronger protection of intellectual property rights increase bilateral trade flows of manufactured nonfuel imports. But the results do not hold for trade flows in high technology, where the effect of protection intellectual property rights was found to be insignificant.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2051.

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Date of creation: 28 Feb 1999
Date of revision:
Handle: RePEc:wbk:wbrwps:2051
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  1. Helpman, Elhanan, 1993. "Innovation, Imitation, and Intellectual Property Rights," Econometrica, Econometric Society, vol. 61(6), pages 1247-80, November.
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  4. Michael Ferrantino, 1993. "The effect of intellectual property rights on international trade and investment," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 129(2), pages 300-331, June.
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  7. Aitken, Norman D, 1973. "The Effect of the EEC and EFTA on European Trade: A Temporal Cross-Section Analysis," American Economic Review, American Economic Association, vol. 63(5), pages 881-92, December.
  8. Guifang Yang & Maskus, Keith E., 2003. "Intellectual property rights, licensing, and innovation," Policy Research Working Paper Series 2973, The World Bank.
  9. Deardorff, Alan V, 1992. "Welfare Effects of Global Patent Protection," Economica, London School of Economics and Political Science, vol. 59(233), pages 35-51, February.
  10. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
  11. 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.
  12. McDonald, John F & Moffitt, Robert A, 1980. "The Uses of Tobit Analysis," The Review of Economics and Statistics, MIT Press, vol. 62(2), pages 318-21, May.
  13. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-81, August.
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