Intellectual property rights,technology transfer and exports in developing countries

We develop a model to analyze one mechanism under which stronger intellectual property rights (IPR) protection may improve the ability of firms in developing countries to break into export markets. A Northern firm with a superior process technology chooses either exports or technology transfer through licensing as its mode of supplying the Southern market, based on local IPR policy. Given this decision, the North and South firms engage in Cournot competition in both markets. We find that stronger IPR would enhance technology transfer through licensing and reduce the South firm's marginal production cost, thereby increasing its exports. Welfare in the South would rise (fall) if that country has high (low) absorptive capacity. Excessively strong IPR diminish competition and welfare, however. Adding foreign direct investment as an additional channel of technology transfer sustains these basic messages.     

DOES FOREIGN INTELLECTUAL PROPERTY RIGHTS PROTECTION AFFECT US EXPORTS AND FDI?

Several previous studies have examined the relationship between intellectual property rights (IPR) protection, exports, and FDI independently. However, very few prior analyses jointly examined the linkages between IPR protection and multiple modes of international transactions. This paper investigates how foreign IPR protection affects how US firms jointly serve overseas markets through exports and FDI. Using both static pooled regressions and a dynamic panel GMM estimator on a panel data of 53 countries, we examine whether stronger foreign IPR protection stimulates US international transactions. The empirical results suggest that foreign countries that strengthen their IPR protection, especially those with strong imitative ability, can attract more international transactions from the USA.     

Intellectual property rights, multinational firms and economic growth

This paper develops a model of North-South trade with multinational firms and economic growth in order to analyze formally the effects of stronger intellectual property rights (IPR) protection in developing countries. In the model, Northern firms invent new higher-quality products, multinational firms transfer manufacturing operations to the South and the Southern firms imitate products produced by multinational firms. It is shown that stronger IPR protection in the South (i.e., the adoption and implementation of the TRIPs agreement) leads to a permanent increase in the rate of technology transfer to the South within multinational firms, a permanent increase in R&D employment by Southern affiliates of Northern multinationals, a permanent decrease in the North-South wage gap, and a temporary increase in the Northern innovation rate.     

Duration of Rent Extraction and the Entry Mode Decision of Multinational Enterprises

The prior literature is ambiguous about the effects of stronger intellectual property rights (IPR) on the choice of a multinational firm's mode of entry into foreign markets. However, available indexes of IPR protection exist only at the country level and do not identify interindustry variation in the ability to extract rents through exclusive rights and other factors. The authors introduce this dimension and compute a parameter that reflects the relative length of time that positive profits may be earned in various industries. Estimation results find that strengthening IPR would reduce exporting in all industries in the sample. However, it would raise (reduce) foreign direct investment, relative to licensing, in industries with shorter (longer) rent‐extraction times.     

Innovation,Imitation, and Intellectual Property Rights with International Capital Movement

This paper extends the established Helpman (1993 ) model by introducing international capital movement, and obtains new results concerning the welfare implications of tightening intellectual property rights (IPR) in the South. First, if separated capital markets in the North and the South are integrated, enforcement of IPR would have more desirable welfare effects in both regions. Second, when international capital movement is allowed, the North always gains from the tightening of IPR if the imitation rate is sufficiently high. This implies that the North's demand on the South to tighten IPR becomes stronger as the integration of international capital markets progresses.     

Determinants of inter-firm technology licensing in the EU

This article investigates the determinants of technology licensing, focusing on how country-specific characteristics affect technology holders’ incentives to sell their proprietary technologies through licensing alliances. An empirical examination of licensing is done using a unique panel data set of licensing transactions involving companies in the EU. The strength of Intellectual Property Rights (IPR) protection, the degree of economic freedom, the level of country risk, and the number of patent granted in the country are found to be important determinants of inter-firm technology licensing. In addition, firms with prior independent experience as a licensor and public companies tend to license technology more.     

International intellectual property rights protection and economic growth with costly transfer

This paper develops a product‐cycle model with costly technology transfer, which requires resources from both the North and the South. In the basic model, we show that strengthening intellectual property rights (IPR) protection induces a large technology transfer and narrows the North–South wage gap. However, we obtain an ambiguous result regarding the effect on economic growth, which depends crucially on the size of the transfer cost. Although strengthening IPR protection induces a high growth rate when the transfer cost is small, it can induce a low growth rate when the transfer cost is large. In the extended model, in order to examine what factors determine the transfer cost, we consider the situation where the Southern firms may misbehave and the Northern firms incur a cost to monitor them. We show that the degree of investor protection and the degree of morality in developing countries influence the size of the transfer cost, which affects economic growth.     

Technology Transfer,Quality Standards,and North–South Trade

This paper examines the economic consequences of technology transfer through licensing in a North–South model of vertical product differentiation, based on a product‐line pricing framework. With its limited technological expertise, the southern firm cannot export to the northern market without purchasing the northern firm's “clean” and low‐cost technology. With North–South cost‐asymmetry, we conclude that the transfer of technology through licensing promotes trade, product variety and improves global welfare. However, without government intervention, the private levels of product quality chosen by firms tend to be lower than the socially optimal levels. This finding helps to explain why developed countries often set quality standards for imported foreign products.     

跨国多期技术授权方式选择及社会福利分析--基于空间数量歧视竞争的框架

跨国技术授权作为企业获得竞争优势的重要途径已经受到理论界的关注。与以往的内部技术授权研究不同,文章构建了一个外国拥有技术的企业与东道国企业的空间数量歧视竞争模型,考察多期技术授权存在技术泄露、关税内生及空间竞争对外国拥有技术的企业的最优授权策略选择以及东道国社会福利的影响。研究表明：(1)外国拥有技术的企业偏好双重收费方式,且固定收费方式优于特许权收费方式;(2)双重收费方式不能同时实现拥有技术的企业和社会福利的最优,但可以实现社会福利的次优;(3)外国企业应该通过双重收费方式或固定收费方式进行技术授权,而东道国政府不应一味地提高关税水平,适当地降低进口关税有利于跨国技术授权的实现。文章的结论对于发展中国家的技术引进以及技术出口政策的制定具有一定的现实意义。     

Licensing under vertical product differentiation: Price vs. quantity competition

This paper develops a duopoly model of vertical product differentiation where two domestic firms incur variable costs of quality development. These domestic firms can purchase a superior foreign technology through licensing. Outcomes between Bertrand and Cournot competition are compared. We find that licensing raises domestic welfare, and domestic welfare is higher in Bertrand than in Cournot competition regardless of whether or not domestic firms engage in licensing. Non-exclusive licensing is also found to benefit the domestic country more than exclusive licensing.     

The Growth Effects of National Patent Policies*

We construct a two‐country (innovative North and imitating South) model of product‐cycle trade, fully endogenous Schumpeterian growth, and national patent policies. A move towards harmonization based on stronger Southern intellectual property rights (IPR) protection accelerates the long‐run global rates of innovation and growth, reduces the North–South wage gap, and has an ambiguous effect on the rate of international technology transfer. Patent harmonization constitutes a suboptimal global‐growth policy. However, if the global economy is governed by a common patent policy regime, then stronger global IPR protection: (a) increases the rates of global innovation and growth; (b) accelerates the rate of international technology transfer; and (c) has no impact on the North–South wage gap.     

International Technology Transfer and Welfare

We investigate the welfare effect of international technology transfer in a quality model. A foreign innovator with a new quality product can license its innovation to the domestic firm(s) via a fixed fee. Findings show that the foreign innovator will license exclusively to the high‐quality firm under Bertrand competition, whereas it may exclusively license to the high‐quality firm, the low‐quality firm, or non‐exclusively to both firms under Cournot competition. Non‐exclusive licensing is necessarily welfare‐enhancing whereas exclusive licensing is welfare‐reducing if the quality of the new technology is not sufficiently superior to that of the domestic ones.     

Intellectual property rights and quality improvement

This paper explores why theories about the effects of intellectual property rights (IPR) protection on foreign direct investment (FDI) and innovation have reached mixed conclusions. In our model, Northern firms innovate to improve the quality of existing products and may later shift production to the South through FDI. Southern firms may then imitate the products of multinationals. We find that imitation can increase FDI and innovation for quality improvements, whereas the opposite occurs when innovators develop new varieties. Hence, stronger IPR protection, by reducing imitation, may shift innovation away from improvements in existing products toward development of new products.     

Does Investing in Technology Affect Exports? Evidence from Indian Firms

The authors use firm-level data from Indian manufacturing industries to explore the determinants of exports, focusing on the role played by technology. The empirical analysis, which distinguishes between a firm's decision to export and the volume of its exports conditional on its having decided to export, reveals that investments in technology via R&D and technology transfer agreements can facilitate the entry of Indian firms into export markets. However, their influence on the volume of exports is fairly limited. Factors with a more broad-based influence on both export participation and volumes include labor intensity and, especially, firm size.     

International Technology Transfers and Competition*

This paper analyzes North–South technology transfers in a model of oligopolistic competition and spatial product differentiation. Two firms in the North supply a high‐tech good and a technically related low‐tech good. They decide about licensing the low‐tech good to suppliers in the South. With the license Southern firms get access to technology from the North, which enables them—with a certain probability—to enter the market for the high‐tech good. Northern firms may therefore license strategically to influence the competitive environment in the high‐tech market. In this setting, multiple equilibria with and without licensing may arise, and the resulting outcomes may be inefficient from the viewpoint of the Northern firms.     

Negotiation over Intellectual Property Rights Protection in a Mixed Market

This article models a North–South negotiation under a mixed oligopolistic setting where a public firm in the South and a private firm from the North compete in the southern market. The southern firm is a public one whose objective is a weighted sum of the South's social welfare and its own profit, whereas the northern firm is a pure profit maximizer. The North provides a quid pro quo in exchange for the strengthening of the enforcement of intellectual property rights (IPR) protection in the South. We show that when the northern and southern firms engage in quantity competition in the southern market, the southern government's optimal choice is either complete protection or complete violation. We show this to depend on the southern government's valuation of the quid pro quo. Moreover, strengthening IPR protection will deepen the privatization process in the South, though it brings about a social welfare loss to the South.     

南方最优知识产权保护水平与南方企业自主创新

构建了一个扩展的南北贸易模型,讨论了南方知识产权保护的决定因素及其对南北双方福利的影响。在模型中,南方政府内生决定知识产权保护水平,北方厂商内生决定研发投资水平和市场竞争策略,南方厂商内生决定自主创新或模仿。研究发现:南方的最优知识产权保护水平与北方存在差异;当南方厂商模仿北方厂商的技术时,南方执行最严格的知识产权保护对北方福利和南方福利都造成损害;当南方厂商的创新效率较高时,严格的知识产权保护能激励南方厂商进行自主创新、改善南方福利。     

Entry into a Foreign Market: Foreign Direct Investment versus Licensing

We compare foreign direct investment (FDI) and technology licensing as two modes of entry into a foreign market. While direct entry via FDI dissipates rents in the host country, opportunistic competition from a licensee may erode rents in the entrant's other markets. Since FDI increases competition in the host country while licensing stifles it. welfare is higher under FDI than under licensing.     

Capital structure,asset utilization,profitability and growth in the Greek manufacturing sector

Greece's accession to the European Union (EU) has affected its economy and its manufacturing sector. Large-size enterprises (LSEs) form a small but vital part of Greek manufacturing and constitute a major component of the country's stock market. According to finance theory, the capital structure of a firm affects its capital cost and market value. This paper, by using dynamic panel data techniques, investigates the determinants of capital structure of LSEs in the Greek manufacturing sector. The findings suggest that asset utilization, gross and net profitability and total assets growth have a significant effect on the capital structure of LSEs. This has straightforward policy implications. Following recent economic developments, Greek firms are exposed to a stronger competition in the EU and global markets, but also to new opportunities. In order to improve their capital structure, Greek manufacturing LSEs need to achieve higher asset utilization and profit margins through economies of scale attained mainly by higher exports. Moreover, governmental measures aiming to support LSEs' efforts should focus their impact on alleviating taxation, reducing bureaucratic burdens, minimizing market imperfections and subsidizing applications of new technology.     

Patent Enforcement, Innovation and Welfare

This paper analyzes how the Southern patent enforcement affects the Northern firm's choice of licensing, subsidiary production or exports for serving the Southern market, and the innovation rate in the North and ultimately the welfare in the South. We show that for imperfect patent enforcement, licensing contract leads to more innovation in the North relative to subsidiary or exports. When both subsidiary and exports are very costly options, no patent enforcement in the South is best for the South. However, when either subsidiary operation or exports can be organized cheaply, the Southern government chooses some positive degree of patent enforcement. We also establish that strengthening of patent enforcement in the South may lead to more licensing and less subsidiary operations or exports.