Ridwan Ah Sheikh & Sunil Kanwar
This paper evaluates the impact of the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) on IPR-intensive export flows. The compliance requirements or the transition period clause that countries enjoyed under the agreement means that TRIPS implementation is staggered. We employ a recent heterogeneity robust difference-in-differences research design based on the rollout of the agreement in 155 countries from 1990-2010. Utilizing various partial aggregation schemes, we summarize the treatment effect heterogeneity across different dimensions. The robustness of baseline model is tested by looking at the impact of agreement in specific industrial clusters, demonstrating increased sensitivity to intellectual property. Our summary parameters aggregated by cohort-time, event-time and calendar-time reveal: First, the aggregate treatment effect estimates suggest that TRIPS on average led to significant reduction in IPR-intensive export flows. Second, our results demonstrate significant heterogeneity both across treatment cohorts as well as across different time periods. In particular, TRIPS led to almost 36% increase in IPR-intensive export flows in early complied cohorts, while the agreement cause 38% decline in exports for the treatment cohorts that complied later. Third, the IPR-intensive exports exhibit U-shaped response to TRIPS, falling for about ten years and then rising again. Moreover, the significant positive impact of agreement based on event-study estimates kicks in with delay. Specifically, eleven years after the agreement’s initiation, export flows are 41% higher in compliant cohorts relative to the comparison group and these effects persist until 14 years after the agreement’s inception. Fourth, the conclusions based on aggregate trade flows remain valid when examining the impact of TRIPS on the composition of trade within disaggregated industry clusters.
Ridwan Ah Sheikh & Sunil Kanwar
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 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.
Ridwan Ah Sheikh & Sunil Kanwar
Using disaggregated industry-level data for 1976-2019, we find, unlike much of the received literature, that patent rights have a strong positive effect on developing country knowledge-intensive imports. Employing the Anderson-van Wincoop gravity model, we find robust evidence of a market expansion effect across knowledge-intensive industries. The overall elasticity of knowledge-intensive imports w.r.t patent rights is 0.59, with considerable variation across industries, being 1.33 for Pharmaceuticals, 0.98 for Other chemicals, and 0.89 for Professional goods. This increase in imports appears to be (mainly) driven by quantity increases, not just price increases. Further, to ease the potential endogeneity concerns, we employ the instrumental variables approach both in linear and non-linear contexts, wherein we use the indicators for former British and French colonial status as instruments for the patent protection index. The robustness of the baseline model is tested using two-stage Poisson Pseudo Maximum Likelihood (PPML) estimator, where we first estimate the standard gravity model with importer-industry-time and exporter-industry-time fixed effects. The power transformation of inward and outward multilateral resistance terms is then recovered from the estimates of fixed-effects. The results based on these alternative estimation frameworks confirm our baseline conclusions.
Qayoom Khachoo, Ridwan Ah Sheikh, and Pritam Banerjee
This study leverages India’s Patent (Amendment) Act, 2002, as a quasi-natural experiment within a difference-in-differences setting to provide the firm-level evidence on the causal mechanism through which patent protection affect firms’ technology adoption and innovation, measured using royalty payments and R&D expenditures, respectively. Furthermore, the study examines how domestic reforms related to patents may affect firms’ export behavior and their integration to the global value chains. Exploiting detailed firm-level database for the universe of Indian manufacturing firms, we classify firms as high-tech if their average technology adoption expenditure during the pre-reform period exceeds the industry median, which is our treatment group. Firms with expenditures below this threshold are categorized as low-tech, which is our comparison group. The empirical analysis suggests that, following the reform, high-tech firms experienced a 17% increase in exports and an 18% rise in both raw material and aggregate imports relative to comparison group. These findings highlight the critical role of technological intensity in shaping firms’ responses to IPR reforms, with significant implications for trade and integration into global value chains (GVCs). This study helps us to understand that stronger IPR regime not only incentivize domestic innovation but also facilitate access to advanced global inputs enhancing firms’ production capacities and export competitiveness.
Qayoom Khachoo & Ridwan Ah Sheikh
Utilizing a novel cross-country dataset on patent filings, this study employs an augmented version of gravity model to explore the impact of preferential trade agreements (PTAs) on non-resident patent filings in emerging market economies of BRICS. PTAs, however, vary in terms of content and design, we therefore analyse their differential impact on patent filings while focussing on deep and shallow PTAs. The PPML estimates suggest that PTAs have a positive and statistically significant impact on non-resident patent filings in BRICS. In particular, country-pairs with PTAs increase their patent flows by 43% relative to control group (dyads with no PTAs). Further, compared to shallow PTA, deep PTAs appear to induce foreign patenting upsurge in BRICS. Shallow PTAs exhibit positive effects in the medium-term but negative effects in the long- term on patent flows, whereas deep PTAs unveil positive anticipatory effects.