Intellectual Property Rights and Foreign Technology Licensing in Developing Countries: An Empirical Investigation

Elisabetta Gentile

Economic Development and Cultural Change, 2020, vol. 68, issue 2, 655 - 698

Abstract: This paper addresses the question of whether expanded and strengthened protection of intellectual property (IP) rights fosters technology transfer to developing countries, which is one of the premises of the Agreement on Trade-Related Aspects of Intellectual Property Rights. Cross-sectional analysis of a representative sample of firms operating in 42 developing economies indicates that going from no IP protection to maximum IP protection is associated with a 65% increase in the predicted probability of licensing foreign technology for the subpopulation of affiliated firms, whereas the predicted probability is not significantly different from zero for unaffiliated firms. We also find evidence that the environment in which a firm operates moderates the relationship of IP protection and firm-level technology licensing: although going from no IP protection to maximum IP protection is associated with a 47% increase in the predicted probability of licensing foreign technology for firms operating in upper-middle-income countries, there is at best no significant correlation for firms operating in lower-middle-income and low-income countries.

Date: 2020
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