Can licensing induce productivity? Exploring the IPR effect
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Can licensing induce productivity? Exploring the IPR effect Gustavo Canavire-Bacarreza1,2
· Luis Castro Peñarrieta1,3
Received: 15 July 2018 / Accepted: 4 May 2020 © Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract Licensing is one of the main channels for technology transfer from foreign-owned multinational enterprises (MNEs) to domestic plants. This transfer, occurring within and across industries, results in technology spillovers that may affect both intra- and interindustry productivity. Intellectual property rights (IPR) legislation may increase (or reduce) this effect. Using Chilean plant-level data for the 2001–2007 period and an exogenous variation from an IPR reform in 2005, we explore whether or not IPR affects the spillover effects of licensing on productivity. We find that stronger IPR reduces backward spillovers but increases forward spillovers. Moreover, the IPR legislation effect is stronger on firms that are on average smaller, and have low productivity. Our results are robust not only to a series of definitions of IPR, licensing, and productivity, but also to a set of different specifications. Keywords Technology licensing · Productivity · Spillovers · Chile JEL O34 · O44 · C5 · K2
1 Introduction The importance of technology transfer to the reduction of productivity gaps between developed and developing nations is well documented (Foellmi et al. 2018; Amann and Virmani 2015; Naghavi 2007; Montalvo and Yafeh 1994; Krugman 1979). Multinational enterprises (MNEs) play a significant role in this, either through foreign direct investment (FDI), imports, or licensing. While the first two have received significant
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Luis Castro Peñarrieta [email protected]; [email protected] Gustavo Canavire-Bacarreza [email protected]
1
Universidad Privada Boliviana (UPB), La Paz, Bolivia
2
The World Bank, Washington, D.C., USA
3
Centro de Investigación y Docencia Económicas, A.C. (CIDE), Aguascalientes, México
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G. Canavire-Bacarreza, L. Castro Peñarrieta
attention (Newman et al. 2018; Zanello et al. 2016; Newman et al. 2015; Blalock and Gertler 2008; Alfaro et al. 2010), less is known about the third, especially regarding its potential spillover effects. Moreover, with the increasing importance of intangible assets in the current state of economic globalization, licensing technology transfer may be enhanced (or reduced) by various factors and conditions, such as the institutional capacity of the host country, that country’s legal structure, and the implementation of stronger property policies, such as intellectual property rights (IPR) (Yang and Maskus 2001; Saravia et al. 2017). Awareness of the importance of IPR has increased over the last thirty years because of the implementation of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in 1995 by members of the World Trade Organization (WTO). However, controversy persists over the effect of strengthening IPR on the welfare of the host economy, and the dearth of quality empirical evidence has fue
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