This chapter presents an empirical analysis of the influence of the strength of intellectual property rights (IPRs) on technology transfer to developing nations. The core contribution is to analyze the relationship between various measures of technology transfer and a set of indexes that quantify the strength of IPRs based on case laws and statutes, while controlling for other factors. The modes of technology transfer examined include services trade (including the licensing of intangible assets), merchandise trade, and foreign direct investment (FDI). The study also evaluates the relationship of IPR strengthening and the associated technology transfer to the evolution of local innovative capacity of developing countries using data on research and development (R & D) and patenting by residents and non-residents. For the analysis the authors have assembled a large data set covering a broad international panel of countries for the time frame 1990 to 2005. The time frame and country coverage are significantly expanded in comparison with previous studies on IPRs. A central issue in academic and policy debate is not only the influence of IPRs on technology transfer but on whether IPRs induce technologically intensive transfers. In other words, how substantive are the induced technology transfers, if any? It is possible that IPR reforms primarily induce foreign investment in wholesale trade operations or in low wage manufacturing facilities. This chapter evaluates the technological content of technology transfers in several ways.
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