Examining how TRIPS implementation affects access to foreign technologies for developing countries

By the year 2016 every member of the World Trade Organization (WTO) has to comply with its agreement on the protection of intellectual property rights (IPR), Trade-related Aspects of Intellectual Property Rights (TRIPS or the Agreement). This implies that each country party to this multilateral trade agreement is obliged to institutionalize the protection of intellectual property rights (IPR) into its national framework. Developed country members have few, if any, changes to make to their legislations in order to become TRIPS compliant. Most developing country members, however, would have to make significant changes in their system to accommodate this harmonized IPR protection regime. This thesis attempts to examine how developing countries are affected by the TRIPS implementation. In particular, I examine whether compliance with the Agreement facilitates developing countries' exposure to foreign technologies. For the first paper, I build an index that captures fifty-three developing countries' compliance with TRIPS by consulting their Trade Policy Review and TRIPS Council review reports, cross-referencing them to their national legislations. I find that most developing countries take advantage of the transition period flexibility offered by the Agreement and that these implementation efforts are relatively independent from their income levels. In addition, countries that are party to regional trade agreements that specify TRIPS protection tend to be compliant earlier than the rest. In the second paper, I apply the TRIPS index to three channels of accessing foreign technology: trade, foreign direct investment (FDI) and licensing activities. I find that countries' compliance with the Agreement has positive impact on FDI in flows, some on inward licensing activities but none on imports. I then argue that actual enforcement of the in-book TRIPS compliance is important in facilitating access to foreign technologies and include an enforcement index. This enforcement proxy is not to be confused with the statutory enforcements mandated by TRIPS itself. When enforcement of the TRIPS compliance is taken into consideration, I observe that on average TRIPS implementation and its enforcement facilitate access to the foreign technologies for developing countries, depending on their level of imitative abilities. The last paper delves further and investigates how local firms are affected by the strengthened IPR protection in using foreign technologies. Using a unique database from the Global Entrepreneurship Monitor on entrepreneurship, I examine how TRIPS implementation affects local entrepreneurs' exploitation of those technologies. I find significant and adverse effects of the IPR reform, which varies according to industrial sectors and categories. The results suggest that stronger IPR protection, via TRIPS implementation, raises the cost of using the foreign technology for entrepreneurs in developing countries.

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