International Technology Licensing, Intellectual Property Rights, and Tax Havens

RePEc Short ID: psa547
ORCID iD: 0000-0002-3788-4511

Santacreu, Ana Maria

doi:10.20955/wp.2019.031

Working Paper Revision

International Technology Licensing, Intellectual Property Rights, and Tax Havens

Abstract: This paper investigates the determinants of international technology licensing using data for 61 countries during 1995-2012. A multi-country model of innovation and diffusion with international technology licensing yields a structural gravity equation for royalty payments as a function of fundamentals. The gravity equation is estimated using nonlinear methods. The model’s fundamentals account for 45% of the variation in royalty payments. Other factors such as imperfect IPR protection and tax havens account for a substantial fraction of the unexplained variation. A back-of-the-envelope calculation suggests that technology transfer from the United States to China would have been 20% larger if China had standards of IPR protection similar to those in the United States.

Keywords: Technology diffusion; royalty payments; intellectual property rights;

JEL Classification: F12; O33; O41; O47;

https://doi.org/10.20955/wp.2019.031