Research

Abstract

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. 

Abstract

This study leverages India’s Patents (Amendment) Act, 2002, as a quasi-natural experiment within a difference-in-differences framework to examine how domestic reforms related to patents may affect firms’ export behavior and their integration to the global value chains. Exploiting a detailed firm-level database covering the universe of Indian manufacturing firms, we find that heightened patent protection is associated with approximately a 18% increase in exports and a 12% increase in total imports among high-tech firms relative to low-tech firms, even including firm, year, and industry-by-year fixed effects. We further show that stronger enforcement of intellectual property rights (IPRs) has a positive impact on firms’ imports of intermediate inputs. Specifically, high-tech firms experienced 20% increase in raw-material imports relative to their low-tech counterparts. In contrast, the reform was associated with a significant reduction in imports of spares and stores. While the average treatment effects on capital and final goods imports remain insignificant, event-study estimates suggest positive and statistically significant effects, albeit with a delay. This study provides policy-relevant evidence that stronger IPRs in emerging market economies such as India enhance firms’ trade performance by stimulating innovation, promoting technology transfer and adoption, and enabling access to advanced global inputs. 

Abstract

This paper utilizes a comprehensive dataset on deep trade agreements between 1988-2017 in a panel of 210 countries to examine the impact of preferential trade agreements (PTAs) on trade, while specifically focusing on the provisions related to intellectual property. The present paper employs a standard structural gravity model using Poisson Pseudo-Maximum Likelihood (PPML) estimation that simultaneously accounts for heteroskedasticity and preponderance of zeros in trade flows. We include rich set of fixed effects to account for multilateral resistance factors and endogeneity in binary trade agreements indicators. Moreover, we incorporate treatment leads and lags to estimate the anticipatory and phased-in impacts of our key trade policy instruments. The results indicate that both PTAs and IPR-related provisions (IPAs) contribute significantly in enhancing trade among member countries and these effects remain robust even after controlling for other relevant Least Absolute Shrinkage and Selection Operator (LASSO) identified provisions using principal component analysis. Within the broad category of IPAs, those related to accession/ratification, national treatment, trademark, patents, industrial design, and enforcement aspects reveal a significant positive impact on trade. Additionally, the results demonstrate that IPAs positively influence bilateral trade flows in both high-IP-intensive and low-IP-intensive products, with a stronger impact observed in the high-IP-intensive group. Similarly, among the high-IP intensive group, provisions related to patents have a stronger positive impact on concurrent trade flow in patent-intensive industries, with these effects persisting up to two years after agreements’ inception. The provisions related to trademark and copyrights resulted in a significant reduction in trade flows within trademark-intensive and copyright-intensive industries, respectively, with any positive impact observed only after a lag. These results highlight the potential impact of deep trade agreements with intellectual property provisions, both at the extensive margin (i.e., number of IP-related provisions) as well as the intensive margin (i.e., specific provisions such as those related to copyrights, patents, enforcement, etc.) across different industries with varying degree of IPR-intensity, an aspect that has been inadequately explored in previous studies.

Abstract

This paper examines the impact of stronger patent protection on manufacturing imports in low- and middle-income countries, both at the aggregate and detailed industry levels. We employ the Bonus-Vetus and the two-stage PPML estimator to control for structural inward and outward multilateral resistance, while using an instrumental variable approach to mitigate endogeneity concerns. The results indicate that stronger patent protection in low- and middle-income countries increases bilateral manufacturing imports by about 26% on average, providing evidence in support of the market expansion effect. This impact is noticeably larger in patent-sensitive industries compared to patent-insensitive industries. The increase in imports appears to be driven mainly by an increase in quantities, and not just by an increase in prices. Moreover, the de facto enforcement of patent laws matters more than their de jure provisions. Our findings suggest that TRIPS-induced policy reforms have been effective in promoting technology diffusion to low- and middle-income countries.