Innovation, productivity and intellectual property reform in an emerging market economy: evidence from India
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Innovation, productivity and intellectual property reform in an emerging market economy: evidence from India Sunil Kanwar1 · Stefan Sperlich2 Received: 25 July 2017 / Accepted: 16 March 2019 © Springer-Verlag GmbH Germany, part of Springer Nature 2019
Abstract This paper attempts to address the question whether intellectual property (IP) reform post-Trade-Related Intellectual Property Rights agreement significantly shifted out the technology or innovation frontier, thereby raising overall productivity in the manufacturing sector of the emerging market economy of India. We explore this question using data on a reasonably large sample of manufacturing firms, for the recent period 1994–2011. Using evidence that the reform was largely exogenously driven, we note that endogeneity problems emanate mainly from the heterogeneity of its impact, that is, from the level of IP intensity of the firms and the R&D activities of the firms. We correct for such possible endogeneity biases by estimating this heterogeneity explicitly by employing varying coefficients for conditional difference-in-differences models. Our results reveal a significant outward shift in the technical or innovation frontier, but only an insignificant increase in productivity, consequent to the IP reform. A oneunit increase in the IP index is found to be associated with a response coefficient of about 0.05 in the technical frontier index for the IP-intensive firms compared to about 0.01 in the technical frontier index for the non-IP-intensive firms, both impacts being strongly significant by themselves as well as significantly different from each other. The insignificant productivity response on account of IP reform per se could at least partly be due to firms lagging behind in the adoption of the improved best practice technology. Keywords Technical frontier · Productivity · Intellectual property reform JEL Classification O34 · O33 · O31 · O11
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Sunil Kanwar [email protected]
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Department of Economics, Delhi School of Economics, University of Delhi, New Delhi, Delhi 110007, India
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Geneva School of Economics and Management, University of Geneva, Bd du Pont d’Arve 40, 1211 Geneva 4, Switzerland
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S. Kanwar, S. Sperlich
1 Introduction Some of the emerging market economies have attracted a lot of attention for an outstanding and sustained growth performance in the course of the last 2 decades. These economies have been amongst the fastest growing in the world, they are the largest economies outside the Organisation for Economic Co-operation and Development with annual GDPs exceeding $1 trillion, they have become increasingly intertwined with the rest of the world and they rank amongst the top few holders of foreign exchange reserves which provides them the potential to become net creditor nations; see for instance, Sperlich (2015) and The BRICS Report (2012). It is perhaps no coincidence, furthermore, that this period has also witnessed stronger protection of intellectual property (henceforth IP) rights in the wake of the Trade-Related Inte
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