Keith E. Maskus

How trade-related are intellectual property rights?

Abstract There is little empirical evidence about whether differing international levels of patent protection influence trade flows. If a nation strengthens its patent laws it could experience higher or lower imports. We specify an empirical model in which deviations of bilateral sectoral imports from anticipated levels are related to income, trade barriers, and patent laws. Patent regulations in the importing country are corrected for endogeneity through the use of instrumental variables. The results of the final equations indicate that increasing patent protection has a positive impact on bilateral manufacturing imports into both small and large developing economies.

Intellectual property rights, licensing, and innovation in an endogenous product-cycle model

Abstract We develop a dynamic general-equilibrium model of the product cycle to study the effects of stronger intellectual property rights (IPRs) in the South on the incentives of firms in the North to innovate and to license advanced technologies. Innovation and licensing are random processes requiring resources. Stronger IPRs increase the licensor’s share of rents and reduce the costs of licensing contracts. Thus, the returns to both licensing and innovation would rise while additional resources would be available for R&D. In consequence, innovation and technology transfer would rise. However, the effect of stronger IPRs on relative wages between regions is ambiguous.

THE INTERNATIONAL REGULATION OF INTELLECTUAL PROPERTY

The International Regulation of Intellectual Property. — The WTO Agreement on Trade-Related Intellectual Property Rights (TRIPS) will usher in a markedly stronger global system of defining and protecting intellectual property rights (IPRs). This paper first discusses the concept of intellectual property and the need for its protection and regulation. It presents evidence on the wide variations in IPRs across countries and discusses how TRIPS will affect these differences. Theoretical predictions about how this stronger system will influence global trade, investment, and technology innovation and diffusion are ambiguous, but limited empirical evidence suggests a modest positive effect overall. However, the distribution of costs and benefits will vary.ZusammenfassungDie internationalen Regeln über das geistige Eigentum. Das WHO-Abkommen über die geistigen Eigentumsrechte im grenzüberschreitenden Handel (TRIPS) wird ein wesentlich strengeres weltweites System zur Definition und zum Schutz geistiger Eigentumsrechte (IRPs) einführen. Der Verfasser erörtert zuerst das Konzept des geistigen Eigentums und den Bedarf, es zu schützen und zu regulieren. Er liefert Belege für die starken Variationen der IPRs im LÄndervergleich und prüft, wie das TRIPS diese Unterschiede beeinflu\t. Theoretische Voraussagen darüber, wie dieses strengere System auf internationalen Handel, Investitionen sowie Innovation und Verbreitung technischen Wissens einwirken wird, sind unklar, aber begrenzte empirische Befunde deuten allgemein auf bescheidene positive Wirkungen hin. Allerdings wird die Verteilung von Kosten und Nutzen variieren.

Quantifying the Impact of Services Liberalization in a Developing Country

The authors consider how service liberalization differs from goods liberalization in terms of welfare, the level and composition of output, and factor prices within a developing economy, in this case Tunisia. Despite recent movements toward liberalization, Tunisian service sectors remain largely closed to foreign participation and are provided at high cost relative to many developing nations. The authors develop a computable general equilibrium (CGE) model of the Tunisian economy with multiple products and services and three trading partners. They model goods liberalization as the unilateral removal of product tariffs. Restraints on services trade involve both restrictions on cross-border supply (mode 1 in the GATS) and on foreign ownership through foreign direct investment (mode 3 in the GATS). The former are modeled as tariff-equivalent price wedges while the latter are comprised of both monopoly-rent distortions (arising from imperfect competition among domestic producers) and inefficiency costs (arising from a failure of domestic service providers to adopt least-cost practices). They find that goods-trade liberalization yields a gain in aggregate welfare and reorients production toward sectors of benchmark comparative advantage. However, a reduction of services barriers in a way that permits greater competition through foreign direct investment generates larger welfare gains. Service liberalization also requires lower adjustment costs, measured in terms of sectoral movement of workers, than does goods-trade liberalization. And it tends to increase economic activity in all sectors and raise the real returns to both capital and labor. The overall welfare gains of comprehensive service liberalization amount to more than 5 percent of initial consumption. The bulk of these gains come from opening markets for finance, business services, and telecommunications. Because these are key inputs into all sectors of the economy, their liberalization cuts costs and drives larger efficiency gains overall. The results point to the potential importance of deregulating services provision for economic development.

Intellectual property rights and licensing: An econometric investigation

Intellectual Property Rights and Licensing: An Econometric Investigation. — Licensing has been virtually ignored in the econometric literature on intellectual property rights (IPRs). We discuss theoretical effects of IPRs on decisions to license technology internationally. Based on a theoretical model we specify a reduced-form econometric equation relating the volume of U.S. licensing to measures of technology protection and other variables in licensee nations. The model is applied to data for 23 countries in a panel covering 1985, 1990, and 1995. The results indicate that countries with stronger patent rights attract larger arm’ s-length volumes of licensed technology, though we are unable to distinguish between licensing quantities and values.

A test of the Heckscher-Ohlin-Vanek theorem: The Leontief commonplace

Abstract This paper provides a logically complete empirical test of the HOV theorem for the United States by comparing measures of factor intensities, trade, and factor endowments. Under the appropriate computations of the factor contents of trade and production, U.S. data are shown to diverge often from their values as predicted by HOV. As a result, it appears that paradoxical outcomes may be common in empirical applications of the theorem.

The Contribution of Skilled Immigration and International Graduate Students to U.S. Innovation

The impact of international students and skilled immigration in the United States on innovative activity is estimated using a model of idea generation. In the main specification a system of three equations is estimated, where dependent variables are total patent applications, patents awarded to U.S. universities, and patents awarded to other U.S. entities, each scaled by the domestic labor force. Results indicate that both international graduate students and skilled immigrants have a significant and positive impact on future patent applications, as well as on future patents awarded to university and nonuniversity institutions. The central estimates suggest that a 10 percent increase in the number of foreign graduate students would raise patent applications by 4.7 percent, university patent grants by 5.3 percent, and nonuniversity patent grants by 6.7 percent. Thus, reductions in foreign graduate students from visa restrictions could significantly reduce U.S. innovative activity. Increases in skilled immigration also have a positive, but smaller, impact on patenting.

The Cost of Compliance with Product Standards for Firms in Developing Countries: An Econometric Study

Standards and technical regulations exist to protect consumer safety or to achieve other goals, such as ensuring the interoperability of telecommunications systems, for example. Standards and technical regulations can, however, raise substantially both start-up and production costs for firms. Maskus, Otsuki, and Wilson develop econometric models to provide the first estimates of the incremental production costs for firms in developing nations in conforming to standards imposed by major importing countries. They use firm-level data generated from 16 developing countries in the World Bank Technical Barriers to Trade (TBT) Survey Database. Their findings indicate that standards do increase short-run production costs by requiring additional inputs of labor and capital. A 1 percent increase in investment to meet compliance costs in importing countries raises variable production costs by between 0.06 and 0.13 percent, a statistically significant increase. The authors also find that the fixed costs of compliance are nontrivial-approximately

Determinants of the structure of U.S. foreign trade, 1958–1976

425,000 per firm, or about 4.7 percent of value added on average. The results may be interpreted as one indication of the extent to which standards and technical regulations might constitute barriers to trade. While the relative impact on costs of compliance is relatively small, these costs can be decisive factors driving export success for companies. In this context, there is scope for considering that the costs associated with more limited exports to countries with import regulations may not conform to World Trade Organization rules encouraging harmonization of regulations to international standards, for example. Policy solutions then might be sought by identifying the extent to which subsidies or public support programs are needed to offset the cost disadvantage that arises from nonharmonized technical regulations.

Development-Related Biases in Factor Productivities and the HOV Model of Trade

Abstract The Heckscher-Ohlin model with three direct-factor inputs is borne out for U.S. net exports of manufactures in annual cross-section regressions for 1958–1976. The coefficient on unskilled labor became significantly more negative over the period, and there is evidence that the negative sign on physical capital may reflect the inclusion of natural resource industries. Further analysis based upon 1960 and 1970 census years suggests the importance as well of skill and technological variables. Calculations of the total factor requirements of U.S. trade uphold the Leontief paradox for 1958 but not for 1972.