Intellectual Property Institutions, Comparative Advantage, and Technology Transfer

This study investigates how improved intellectual property rights (IPR) institutions can result in divergent trade patterns for economies in different stages of development but be beneficial through different mechanisms. While IPR protection is a determinant of comparative advantage for OECD countries, there is no immediate impact on the composition of exports in non-OECD countries. We use a battery of fixed effect models and exploit information on differential timing of IPR reforms in a staggered difference-in-difference framework to show that IPRs only shift OECD countries’ exports towards intellectual property (IP)-intensive sectors. We then show that better IPR quality could nevertheless stimulate technology transfer by encouraging imports of IP-intensive goods into non-OECD countries. This conjecture is confirmed using data on the number of technologies adopted in each country and show that IPRs can create a transition in less advanced economies towards a more IP-intensive export sector, if complemented by technology adoption