Fed in Print
All Title Author Abstract
Bank Series Content Type Author JEL Classification

Working Paper Revision

Dynamic Gains from Trade Agreements with Intellectual Property Provisions


Abstract: I study the short- and long-term effects of trade agreements with strict intellectual property (IP) provisions on innovation, growth and welfare. I develop a quantitative multi-country trade model with endogenous productivity through innovation and adoption that features imperfect IP rights enforcement. A counterfactual analysis shows that improving IP protection in exchange for market access increases welfare, innovation and growth in the world. However, welfare gains along the transition accrue differently across countries. While developed countries benefit both in the short- and in the long- run from these agreements, developing countries experience short-run losses; these losses are amplified if IP improvement is not accompanied by trade liberalization. In contrast to findings from standard trade models, liberalizing trade without improving IP rights decreases welfare and innovation in the long-run, making the distortion of imperfect IP protection worse.

JEL Classification: F12; O33; O41; O47;

https://doi.org/10.20955/wp.2021.010

Status: Published in Journal of Political Economy

Access Documents

File(s): File format is application/pdf https://s3.amazonaws.com/real.stlouisfed.org/wp/2021/2021-010.pdf
Description: Full Text

Authors

Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Working Papers

Publication Date: 2021-11-22

Number: 2021-010

Note: Publisher DOI: https://doi.org/10.1086/734094

Related Works