Recipient Organization
UNIV OF MINNESOTA
(N/A)
ST PAUL,MN 55108
Performing Department
Applied Economics
Non Technical Summary
The purpose of this project is to examine contemporary issues concerning intellectual property rights (IPRs) policies and implications for international trade, economic growth, and technology transfer that have significant impacts on the economic welfare of human beings. The project includes research on two broad and overlapping questions: (1) What are the effects of intellectual property rights on international trade, including trade in genetically modified crops (GMOs)? (2) What are the effects of intellectual property rights on economic growth?The economic methods will vary to fit the project goals and questions described above. The theoretical approaches include game theory, general equilibrium models of international trade, and macroeconomic growth models. The prominent empirical approach is to examine the questions thematically for all countries that comprise the global economy. Thus, the research will rely primarily on panel data which are detailed by country, year, and industry (as appropriate to the underlying theoretical models). Econometric methods include a variety of regression techniques. Synthetic Control methods will also be used.The ultimate goals of the project are to examine the effects of policy decisions (e.g., intellectual property rights policies; GMO regulations; trade, growth and technology transfer policies) on the economic welfare of stakeholders at the national and global levels. Stakeholders include consumers, producers (e.g., farmers), innovators (e.g., seed companies), and governments.
Animal Health Component
100%
Research Effort Categories
Basic
(N/A)
Applied
100%
Developmental
(N/A)
Goals / Objectives
The over-arching goal is to analyze contemporary and frontier issues concerning country differences in protections of intellectual property (e.g., knowledge-based assets). The specific objectives are to examine the following:Effects of intellectual property rights on international trade, including trade in genetically modified crops.Effects of intellectual property rights on economic growth.The project goals align most closely with global and national needs, but are relevant to Minnesota as well. For example, the results of research that defines the unit of analysis as countries applies equally well to larger units (such as groups of countries) or smaller units (such as provinces or states) that are similar in relevant characteristics. The topics of this proposal are relevant to Minnesota since Minnesota producers are engaged in international trade (as exporters or importers); technology transfers (as sources or recipients); and contribute to economic growth (at the state and national levels). Further, Minnesota producers include producers of genetically modified crops. Thus, both the subjects and applications of the proposed research provide policy guidance to Minnesota stakeholders.
Project Methods
The economic methods will vary to fit the project goals as summarized below.1. Effects of intellectual property rights on international trade, including trade in genetically modified crops.The first goal is to examine how foreign IPRs affect U.S. bilateral exports of genetically modified crops. I will focus on the U.S. as the source country because the U.S. is the leading adopter of GMO technologies and is thus the leading source of GMO exports. I will focus on the industries of soybeans, maize, cotton and rapeseed as these crops have the highest shares of GMO content. U.S. exports of these crops are almost entirely GMO. This focus is advantageous because I can isolate trade in GMOs in a way not done in broader studies of agricultural trade.I will begin by examining the determinants of bilateral exports of GMO crops from the U.S. to all other countries. I will apply the Gravity model of international trade which predicts bilateral flows between countries based on country characteristics including their policies. I will focus on the role of IPRs policies including countries' IPRs regime, plant patentability, and plant variety protections. The IPRs regime represents the overall strength of countries patent laws including coverage in a broad range of technology areas. Plant patentability represents whether countries offer patenting of plants, including conditions when the invention is not confined to a particular plant variety. Plant variety protections represent the strength of protections for plant varieties through plant breeders' rights as well as patents (for plant varieties, for plants and animals, for microorganisms, food, and pharmaceutical products, which are all related to genetic resources). As noted earlier, IPR protections of GMO technologies can take the form of patenting of plants or plant breeder's rights (PBRs), or both. These distinctions are important. For example, while the overall patenting regime may be strong in a country, that same country may provide no patenting of plants. Similarly, while PBRs may be protected in a country, that same country may provide no patenting of plants. PBRs can be viewed as a complement and/or substitute for patenting of plants as these forms of IPRs cover different aspects of the technology, but can also be overlapping.Second, I will consider the effects of IPR on U.S. bilateral exports of GMO crops, when IPRs policies are adjusted to account for policy enforcement in importers. The issue of policy enforcement is important because it is possible for countries to have strong IPR laws, but have weak enforcement of these laws. Thus, I will create a measure of "effective protection" where the strength of a country's IPRs policies is discounted if legal institutions are weak.Third, I will examine the effects of foreign GMO regulations on U.S. bilateral exports of GMO crops. Specifically, I will consider the GMO approval process, risk assessment, labeling policies, traceability requirements, coexistence guidelines, and membership to international agreements. I will also construct a measure of the difference in new approvals of GMO events between the U.S. and her trading partners ("asynchronous approvals"). This index captures the approval differences between countries that are intolerant to GMOs and others which take a more lenient stance. Using these measures, I will examine the effects of IPRs on trade, after controlling for GMO regulations and asynchronous approvals of GMO events.Fourth, I will consider whether the effects of IPRs on U.S. bilateral exports of GMO crops differ for hybrid vs. self-pollenating crops? The distinction between hybrid and self-pollenating crops is important because, as noted earlier, the legal recourse provided by IPRs is particularly relevant to self-pollinating seed crops, where the technology embodied in the crop can be directly transferred. Thus, I expect IPRs to play a relatively stronger role in affecting trade in self-pollenating crops relative to hybrids.2. Effects of intellectual property rights on economic growth.The secondgoal is to empirically examine the relationship between IPRs and economic growth, with a focus on features that potentially alter this relationship across countries, across time (pre and post-TRIPs), and across the development levels of countries. Such features include the staggered compliance with the TRIPs agreement.Most of the existing empirical literature on the effects of IPRs on economic growth uses econometric approaches which rely on country cross-sections or panel data. One of the common problems in this literature is reverse causality. That is, the direction of causality between IPRs policies and economic growth is unclear. While instrumental variable techniques can be used to control for reverse causality, finding an appropriate instrument is challenging in cross-country analysis. Another common problem in the empirical literature is policy heterogeneity. For example, countries vary considerably in their portfolio of policies that comprise their IPRs regimes; countries also vary in their enforcement of these policies; and countries vary in the timing of their compliance with major agreements such as the TRIPs agreement. Country case studies provide an alternative approach that is less subject to these concerns. However, country case studies tend to suffer from small sample size concerns.The proposed research will use an alternative Synthetic Control method that is particularly valuable for examining policy effects in research situations where data are limited to small sample sizes; and where reverse causality and heterogeneity are concerns. I will apply the Synthetic Control method to a macroeconomic growth model that distinguishes capital as physical capital, human capital, and intellectual property. Using this method, I will define treated and untreated units. Treated units are those countries that have complied with the TRIPs agreement; and untreated are countries that have not complied with TRIPs. I will use the non-treated units to construct a counterfactual version of the treated units. This approach allows me to estimate the counterfactual of each TRIPs compliant country's economic growth had they not complied with the TRIPs agreement. I will use placebo testing for statistical inference. I will then compare the Synthetic Control results with more traditional Difference-in-Difference regression results. The former shows the effects of TRIPs compliance on economic growth at the individual country level; and the latter shows the effects of TRIPs compliance on economics growth on average across countries.