Do Intellectual Property Rights Affect World Trade?

Luis J. Gonzalez and Ellis B. Heath

This paper examines the link between intellectual property rights and world trade. To proxy for intellectual property rights, the World Trade Organization's (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is used. An augmented gravity model incorporating 178 countries and over 14 years of observations is employed to tease out the effect of TRIPS on international trade. While previous studies have looked at GATT/WTO membership and its effect on trade, little research has investigated empirically the role that TRIPS plays on international trade. Here, we find that adherence to TRIPS reduces international trade. This result holds for cases where both trade partners are members of TRIPS and for cases where only one trade partner is a member.

JEL Codes: D23, F13, F14 and F63

DOI : http://dx.doi.org/10.21102/gefj.2014.03.71.01