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Intellectual property rights and economic growth: An application of the Synthetic Control method

This paper examines the effects of intellectual property rights (IPRs) on the economic growth of countries, with special attention to developing countries.  We examine both the strength of countries’ IPRs, as well as their compliance with the 1995 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) of the World Trade Organization.  Our theoretical framework is a growth model which distinguishes capital as physical capital, human capital and intellectual property.  Our methods include panel regression techniques, plus a novel Synthetic Control method.  The latter is valuable for examining policy effects in research situations where data are limited to small sample sizes; and where reverse causality and heterogeneity are concerns.  The Synthetic Control method allows us to assess the impact of TRIPs compliance on economic growth relative to a counterfactual of what would have occurred in the absence of compliance.  The results show that while select developing countries experience growth benefits from complying with the TRIPs agreement, others do not, supporting the notion that there is a wide range of heterogeneity in the effects of IPR reforms on growth.  These findings are robust when we account for marginal institutional changes in IPRs, enforcement of IPRs, and technological capacity in developing countries.

Citation: 

Smith, Pamela J. and Sebastian Anti.  2022 (forthcoming).  Intellectual property rights and economic growth:  An application of the Synthetic Control method.  The World Economy.

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Intellectual property rights and trade: The exceptional case of GMOs

This paper examines how foreign intellectual property rights (IPRs) affect US bilateral exports of genetically modified crops (GMOs). We apply the structural gravity model to examine GMO trade between the United States and the countries that comprise the rest of the world. Our econometric method includes the Poisson Pseudo Maximum Likelihood estimator. We use panel data including measures of countries’ IPR regimes, plant patentability, plant variety rights, GMO regulations and asynchronous approvals of GMOs. Results show the United States tends to export fewer GMO crops to countries with strong IPR regimes, plant patentability and plant variety rights. These results are consistent with the market power effect, where the United States restricts exports to countries with strong protections to extract monopoly prices. Second, enforcement of IPRs strengthens the market power effect. Third, the market power effect is strong alongside with GMO regulations and asynchronous approvals. Fourth, the market power effect is larger for self-pollinating crops vs. hybrids. These findings are robust across a variety of specifications. However, we also find a price premium in countries with less ease of US market access, with more domestic production of GMOs, and with weak traceability requirements. These features play a stronger role than IPRs in determining price.

Citation:

Smith, Pamela J., and Xiangwen Kong.  2022.  Intellectual property rights and trade:  The exceptional case of GMOs.  The World Economy 45 (3):  763-811.

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Patents for self-replicating technologies: Game theoretic analysis of genetically modified seed

This paper examines the implications of patents for farmers’ decisions to use genetically modified (GM) seed versus traditional non-GM seed. We consider a game theoretic approach employing the replicator equation to assess the conditions for farmers’ adoption decisions. The results show that farmers may choose GM seeds even when this decision leads to lower profits than using traditional seeds. This result emerges because of the self-replicating characteristic of the technology of seeds and their dispersion via acts of nature and/or intentional infringement. This result is robust across our baseline model and extended model that includes the option for farmers to intentionally infringe upon the GM seed technology. This result is also robust with respect to a wide range of initial conditions and parameter values representing economic conditions including the dispersal of the GM technology, monitoring effort, payoffs of GM seed relative to traditional seed, cost of patent infringement, cost of contamination, and added cost of legally using GM seed.

Citation:

Smith, Pamela J., and Andrew R. Tilman.  2020.  Patents for self-replicating technologies: Game theoretic analysis of genetically modified seed.  Journal of World Intellectual Property Rights 23 (3-4):  166-184.