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Do stronger intellectual property rights protections raise productivity within the context of trade liberalization? Evidence from China

Xiaotian Hu and Xiaopeng Yin

Economic Modelling, 2022, vol. 110, issue C

Abstract: Total factor productivity (TFP) is essential for the firm, and research shows it is affected by many factors, such as institutional quality. However, less attention has focused on intellectual property rights protection (IPP). Using an integrated Chinese manufacturing enterprises database from 2000 to 2007 and an instrumental variable estimator jointly with the difference-in-differences approach to account for endogeneity of the IPP variable, we explore the effects of stricter IPP on manufacturer TFP at the province-industry level. First, we find that, on average, stronger IPP raises the TFP of Chinese manufacturers within the context of trade liberalization. Second, we examine the mechanisms explaining our finding—tighter IPP can improve firm TFP by encouraging more innovational activities and the importing of capital goods with higher quality. Our main results are robust to a set of alternative specifications even when the 2008 financial crisis is considered.

Keywords: Difference-in-differences; Intellectual property rights protection; Manufacturing firms/industry; Productivity; Trade liberalization (search for similar items in EconPapers)
JEL-codes: D24 F14 F61 O30 O34 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
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DOI: 10.1016/j.econmod.2022.105791

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