I/P Reform Increases International Tech Transfer

World Bank Policy Research Working Paper No. 3305 entitled "A paper "Do Stronger Intellectual Property Rights Increase International Technology Transfer? Empirical Evidence from U.S. Firm-Level Panel Data" (May 11, 2004) empirically tests the hypothesis that IPR reforms increase technology transfers between countries by analyzing how measures of U.S. affiliate activity and levels of foreign patenting change in a set of 12 countries that undergo reforms. According to the authors, "The results provide strong evidence that U.S. multinationals respond to changes in IPR regimes abroad by increasing technology transfers to reforming countries. Affiliates also increase their R&D expenditures at the time of reforms and these increases are concentrated among affiliates of parents that use U.S. patents intensively.

"These results are not, of course, sufficient to demonstrate that IPR reform is welfare enhancing for the reforming countries. The analysis does not consider the impact of reforms on locally-owned firms that may be displaced after reforms nor does it examine the effects of the reforms on the pace of innovation in non-reforming countries. However, given the lack of evidence that IPR reform spurs domestic innovation, increases in technology transfer are likely to be a necessary condition for IPR reform to increase welfare in reforming countries. Our results suggest that this condition is met."