Content area
Abstract
Since the early 1990s, there has been a growing interest in the potential contribution of intellectual property rights protection (IPR) to global trade and investment. Much controversy, however, exists as to which extent stronger intellectual property rights actually stimulate international technology transfer. Several policy-relevant questions remain. Is the strengthening of intellectual property laws a productive way to promote technological innovation in developed countries and technological change in developing countries?
This paper addresses the issue by performing an analysis of how foreign intellectual property rights (IPR) protection affects the way U.S. companies serve overseas markets: through exports, foreign direct investment (FDI), and licenses. These three international transaction approaches are considered as major channels through which technologies flow across national borders. Using panel data from industries and countries (1994-2006), this study examines the role of IPR in trade, FDI and licensing.
First, this thesis confirms a positive effect of IPR on U.S. FDI to countries with strong imitative ability. Second, across most industries, positive market expansion effect dominates negative market power effect, in which case stronger IPR has relatively larger positive effect on U.S. exports and FDI to countries with strong imitative abilities. In other industries, however, this thesis found the opposite that negative market power effect dominates positive market expansion effect, and stronger IPR has relatively larger negative effect on U.S. exports and FDI to countries with weak imitative ability. All these indicate that U.S. exports and FDI to countries with strong imitative ability are more positively sensitive to IPR strengthening. But U.S. exports and FDI to countries with weak imitative ability are more negatively responding to the strengthening, as such countries are more easily controlled under IPR-induced monopolies. Third, strong imitative ability by itself can hurt one country's received U.S. exports in certain industries. This thesis also finds other important variables to explain U.S. exports, FDI and licenses. They are foreign market size, openness, and affiliates’ received taxes.
This thesis's results can give several policy implications for foreign countries concerning their received U.S. exports, FDI, and licenses. Generally speaking, foreign countries, especially those with strong imitative abilities, can enhance their IPR regimes to attract more international transactions from the U.S. However, no matter for countries already with strong imitative abilities or for countries with only weak imitative abilities, before really taking actions to strengthen their IPR regime, they should examine with caution stronger IPR’s specific effects for each important industry. In addition, this paper can also shed lights on IPR related globalization effect on the U.S. domestic economy. Since foreign IPR could affect U.S. exports, FDI, and licenses, it then could influence U.S. current account, employment, wages, among many other issues.
