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 advanced economies, there is no immediate impact on the composition of exports in developing countries. We use a panel and a triple-difference event study to exploit information on differential timing of IPR reforms and show that IPRs only shift developed countries' exports toward intellectual property (IP)-intensive sectors. We then highlight the role of technology transfer by showing that better IPR quality could nevertheless create a transition in less-advanced economies toward a more IP-intensive export sector, if complemented by technology adoption.