Showing papers on "Spillover effect published in 1998"

Spillovers and the Locational Effects of Public Infrastructure

Abstract: This paper examines the possibility of negative output spillovers frompublic infrastructure. A model of productive public capital shows that when input factors aremobile, public infrastructure investments in one location can draw production away from otherlocations. In a linear production-function framework, this effect would be manifested as anegative output spillover from public capital. Using data for California counties from 1969through 1988, such negative spillover effects are shown to exist in the case ofstreet-and-highway capital. The data show that changes in county output are positivelyassociated with changes in street-and-highway capital within the same county, but outputchanges are negatively associated with changes in street-and-highway capital in other counties.

Up- and downstream restructuring, foreign direct investment, and hold-up problems in agricultural transition

Abstract: Reform in the transitional economies has been marked by falls in agricultural output and by decapitalisation of the agricultural production system. A key factor is the disruption caused by the break-up of the pre-reform, vertically integrated, centrally planned, contracting system within the agri-food supply chain. This paper analyses how restructuring up- and downstream from production is affecting output levels, particularly the impacts of hold-up problems characterised by excessively long payment delays for delivered products. Standard institutional solutions to the hold-up problem, including supply contracting, cooperatives and vertical integration, have disadvantages in the short-to-medium term. FDI at the processing level is shown to be capable of solving hold-up problems, whilst producing important positive spillover effects within the sector and across adjacent sectors. Empirical evidence indicates strong output, yield, and investment responses when hold-up problems are solved. Copyright 1998 by Oxford University Press.

The importance of “spillovers” in the policy mission of the advanced technology program

Abstract: Government policies like the Advanced Technology Program (“ATP”) are intended, at least in part, to remedy the “market failure” inherent in the fact that a significant portion of the social benefits of new knowledge and technology are not captured by a firm that invests in R&D. ATP’s project selection, and its evaluation of the impact of its program, can be made more effective by explicitly incorporating the analysis of such “spillovers.” For project selection, this means identifying technological, organizational and economic factors that tend to oint to a large “spillover gap,” or deviation between the social and private rates of return to a proposed project. For program evaluation and assessment, it means adapting existing study methods that measure social returns to innovation in ways that explicitly capture spillover effects.

Bode integral constraints, collocation, and spillover in active noise and vibration control

Abstract: With the success of feedforward techniques for active noise control, feedback control researchers have begun to explore the relationship between these two control paradigms. The goal of this paper is to further investigate this relationship by means of the classical Bode integral constraint on achievable performance. This constraint provides insight into the phenomenon of spillover which we define as disturbance amplification by the closed-loop system relative to the open-loop transfer function gain. Specifically, it is shown that a particular feedforward controller called the zero spillover controller avoids spillover by producing perfect disturbance cancellation at every frequency. The analysis suggests that spillover can be avoided only if the control speaker and the disturbance source are noncollocated and the performance microphone and the measurement microphone are noncollocated. For realizability, we derive the approximate zero spillover controller which is shown to be an optimal feedback controller for an LQG problem with suitable cross weighting. Finally, the results are illustrated by means of structural and acoustic examples.

Enterprise performance and the functional diversity of social capital.

Abstract: Entrepreneurial networks are multifunctional; they can be used to access information about technologies and markets or to reduce uncertainties. A network`s function affects its structure and both the magnitude and nature of the impact that it has on enterprise performance. Networks that reduce uncertainty are small and cohesive. They generate positive spillover effects, while having little overall effect on enterprise performance. Networks that provide access to information about technologies and markets are large and diverse. They have a significant effect on enterprise performance, but tend not to generate positive spillovers. Evidence from the Ghanaian manufacturing sector supports these propositions.

Learning by doing, technology gap, and growth

Abstract: In contrast with other trade and growth theories in previous literature, The author resents a growth theory of trade-induced learning: other things being equal, two conditions are essential for trade-induced learning. First, both exports and imports are equally important sources and are mutually reinforced in intensifying the learning process. Moreover, the nature or characteristics of these traded goods also influence the effect of learning. Second, trade openness is a prerequisite but not a sufficient condition for rapid growth. With whom one trades (one's trading partner) is a key factor in determining trade-induced technology spillover and hence in affecting enduring growth. Therefore, this trade-induced learning theory provides abundant and testable implications for the empirical study of trade and growth. Copyright 1998 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Effects of Leader Support in the Work Unit on the Relationship Between Work Spillover and Family Adaptation

Abstract: This study examines the direct versus the buffering effect of leader support in the work unit on the relationship between work spillover and family adaptation. The analyses use data from a probability sample of 3,190 married soldiers in the U.S. Army who participated in the 1989 Army and Family Survey, and the data are analyzed by the gender of the respondent. Two types of work spillover are examined in the analysis (energy and time interference), and both internal and external types of family adaptation are hypothesized and supported by the empirical analysis. Only modest support is found for the buffering effect hypothesis. In support of the direct effect hypothesis, the findings indicate that leader support in the work unit decreases perceptions of work spillover, which is a preventive effect, and enhances perceptions of external adaptation, which is a therapeutic effect.

Public Infrastructure: Pork or Jobs Creator?

Abstract: Past studies of the impact of public capital on state economic well-betng have often focused on estimates of productton functions, yet such an approach overlooks some important economic relationships. This article presents estimates designed to care fully measure the impact of public capital on state employment by using a model that incorporates infrastructure impacts from several different sources Controlling for differences in states' industrial structure, demand conditions, production costs, demographics, and noninfrastructure amenities and state fixed effects, the authors find that infrastructure is a significant variable in determining state employment. Moreover, surrounding state highway public capital apparently has positive spillover impacts. Finally, a simulation is conducted to examine whether a govern ment policy of raising taxes to fund an increase in public infrastructure increases employment.

Information and Volatility Linkages in the Stock, Bond, and Money Markets

Abstract: NOTE: The following is a description of the paper and is not the "actual" abstract. This article examines the nature of volatility linkages in an economy with multiple securities markets. The analysis is based on the relation between volatility and information flow. To formalize this relation, we develop a simple model of speculative trading where the traders take positions in one or more futures contracts based on their current expectations and their risk tolerances. As new information is released, they update their expectations, revise their demands, and trade accordingly. Under the model, information generates market linkages in two ways. First, information can simultaneously affect expectations about the risk and return characteristics of multiple contracts (i.e., the information is common across markets). Second, information can directly affect expectations in only one market but impact other markets through hedging demand (i.e., there is an information spillover between markets). In frictionless markets, the model predicts that hedging causes complete information spillover, leading to perfectly correlated volatility changes across markets. In practice, however, institutional factors and market frictions will limit the impact of cross-market hedging and preclude complete spillover. As a result, the model predicts strong volatility linkages in markets where the hedging benefits are large and the hedging costs are small. We use a stochastic volatility representation of the model to estimate the volatility linkages for three futures markets where we expect both common information and information spillover to be important: the stock, bond, and money markets. The results are generally supportive of our model. The time-series properties of returns are similar to those predicted by the model and the volatility linkages between markets are strong. In addition, subperiod analysis suggests the strength of the linkages increased substantially following the 1987 stock market crash.

Economic and technological performances of international firms

Abstract: The research performed throughout this dissertation aims at implementing quantitative methods in order to assess economic and technological performances of firms, i.e. it tries to assess the impacts of the determinants of technological activity on the results of this activity. For this purpose, a representative sample of the most important R&D firms in the world is constituted. The micro-economic nature of the analysis, as well as its international dimension are two main features of this research at the empirical level.The second chapter illustrates the importance of R&D investments, patenting activities and other measures of technological activities performed by firms over the last 10 years.The third chapter describes the main features as well as the construction of the database. The raw data sample consists of comparable detailed micro-level data on 2676 large manufacturing firms from several countries. These firms have reported important R&D expenditures over the period 1980-1994.The fourth chapter explores the dynamic structure of the patent-R&D relationship by considering the number of patent applications as a function of present and lagged levels of R&D expenditures. R&D spillovers as well as technological and geographical opportunities are taken into account as additional determinants in order to explain patenting behaviours. The estimates are based on recently developed econometric techniques that deal with the discrete non-negative nature of the dependent patent variable as well as the simultaneity that can arise between the R&D decisions and patenting. The results show evidence of a rather contemporaneous impact of R&D activities on patenting. As far as R&D spillovers are concerned, these externalities have a significantly higher impact on patenting than own R&D. Furthermore, these effects appear to take more time, three years on average, to show up in patents.The fifth chapter explores the contribution of own stock of R&D capital to productivity performance of firms. To this end the usual productivity residual methodology is implemented. The empirical section presents a first set of results which replicate the analysis of previous studies and tries to assess the robustness of the findings with regard to the above issues. Then, further results, based on different sub samples of the data set, investigate to what extent the R&D contribution on productivity differs across firms of different industries and geographic areas or between small and large firms and low and high-tech firms. The last section explores more carefully the simultaneity issue. On the whole, the estimates indicate that R&D has a positive impact on productivity performances. Yet, this contribution is far from being homogeneous across the different dimensions of data or according to the various assumptions retained in the productivity model.The last empirical chapter goes deeper into the analysis of firms' productivity increases, by considering besides own R&D activities the impact of technological spillovers. The chapter begins by surveying the alternative ways proposed in the literature in order to asses the effect of R&D spillovers on productivity. The main findings reported by some studies at the micro level are then outlined. Then, the framework to formalize technological externalities and other technological determinants is exposed. This framework is based on a positioning of firms into a technological space using their patent distribution across technological fields. The question of whether the externalities generated by the technological and geographic neighbours are different on the recipient's productivity is also addressed by splitting the spillover variable into a local and national component. Then, alternative measures of technological proximity are examined. Some interesting observations emerge from the empirical results. First, the impact of spillovers on productivity increases is positive and much more important than the contribution of own R&D. Second, spillover effects are not the same according to whether they emanate from firms specialized in similar technological fields or firms more distant in the technological space. Finally, the magnitude and direction of these effects are radically different within and between the pillars of the Triad. While European firms do not appear to particularly benefit from both national and international sources of spillovers, US firms are mainly receptive to their national stock and Japanese firms take advantage from the international stock.

Foreign Firms and Technology Transfer Knowledge Spillovers to Indian Manufacturing Firms

Abstract: The present paper uses techniques from stochastic production frontier and panel data literature to test for the spillover hypothesis that 'presence of foreign firms and disembodied technology import in a sector leads to higher productivity growth for domestic firms'. The study uses panel data for 368 medium and large-sized Indian manufacturing firms for the period 1975-76 to 1988-89. The results indicate that the domestic firms tend to benefit from foreign-owned firms irrespective of the technological and production requirement of the sectors. However, once the initial level of productivity gap is considered, it is firms belonging to the 'scientific' subgroup that experience knowledge spillovers from the presence of foreign-owned firms. The other source of knowledge spillover i.e., disembodied technology import in the sector does not attain significance in either variant of the model. Furthermore, the result of previous studies that find knowledge spillovers in low-tech sectors where technology-gap is smaller between foreign-owned firms and local firms is also not validated in the present study.

International Transmission of the Business Cycle in a Multi-Sectoral Model

Abstract: Multi-country models have not been very successful in replicating important features of the international transmission of business cycles. This paper extends previous work by introducing multiple sectors and traded intermediate inputs. Trade in intermediate goods represents approximately 60% of total trade and could significantly affect the main features of the international transmission of business cycles. In our model, imperfect substitution between domestic and foreign goods leads to cross-hauling in intermediate goods. As well, with more than a sector within each country there may be important inter-sectoral spillover effects that alter the transmission of shocks across countries. We show that these features of the model are important and can generate cross-correlations of output levels, employment and investment that are compatible with the data.

Dynamic complementarity in export promotion: The market access program in fruits and vegetables

Abstract: Government-supported promotion in foreign markets may be justified when market failures exist, such as spillover externalities, where promotion of one commodity positively influences exports of another, or when market uncertainties cause planning horizons to be shorter than the persistent effects of promotion. A dynamic model of U.S. apple, almond, grape, and wine export supply is developed to test for these market failures. Promotion is viewed as an investment in establishing and maintaining a product's image. Evidence supporting the existence of each market failure is found. Exporters and program administrators may fail to account for them in export promotion planning.

On the Dynamics of Product and Process Innovations. A Bivariate Random Effects Probit Model / Zur Dynamik von Produkt- und Prozeßinnovationen. Ein bivariates Random-Effects-Probitmodell

Abstract: Based on a stochastic dynamic model of a firm's optimal innovative behavior we derive a simultaneous equation system for product and process innovations with intertemporal spillover effects. We estimate various versions of the model with dichotomous innovation data at the firm level by using a bivariate dynamic random effects probit model. The data set, provided by the Ifo-Institute, covers the period between 1981 and 1989 and includes 586 firms of the West German manufacturing sector. It turns out that the firms probabilities of product and process innovations depend positively on dynamic spillover effects even if one controls for firm size, market concentration, demand expectations, labor cost, unobserved heterogeneity and potential endogeneity of the explanatory variables.

On the European monetary system: the spillover effects of German shocks and disinflation

Abstract: We analyse the disinflationary experience between 1979-93 for two traditionally inflationary countries of the European Monetary System: France and Italy. For each country, a vector autoregressive model is estimated. Shocks in the model combine domestic and foreign sources. The latter capture the world oil price shocks as well as nominal and real shocks originating in Germany. Under investigation is the hypothesis that shocks originating in Germany have a spillover disinflationary effect in France and Italy. The empirical evidence provides support to the validity of this hypothesis. Furthermore, German shocks account for an important share of the total price variance in France and Italy. These results indicate that the interaction between countries of the European Monetary System has contributed to the success of the disinflationary experiences of the 1980s. The evidence sheds, therefore, some light on potential benefits that may be further realized as countries of the European Monetary System move towards...

An Investigation of Economic Linkages among the ASEAN Group of Countries

Abstract: This study investigates existence of any economic linkages among the five founding members of the Association of Southeast Asian Nations (ASEAN), and explores the nature of these linkages. Based on the Vector Autoregression, variance decomposition and impulse response function analyses applied to quarterly real GDP data for the 1975-93 period, the results show the leading role of Indonesia and the significant economic linkages among them. The direction of causation and transmission is from Indonesia to the Philippines to Thailand to Malaysia and to Singapore. A two-way causation is found between Singapore and Malaysia. The study also finds the economic vulnerability of the ASEAN group of countries to changes in U.S. output, and the competitive nature between the Japanese and the ASEAN economies. These findings have important policy implications. 1. Introduction This article examines the issue of economic linkages among the ASEAN group of countries, and assesses the strength and the direction of these linkages.1 Although much has been written about the growing economic interdependence among these countries, so far no study has been undertaken to quantify and explore the nature of their interdependence. To achieve this objective, we utilize vector autoregression (VAR) techniques used to study regional linkages (Cargill and Morus 1988; Cromwell 1992; Sherwood-Call 1988). We examine the regional and international spillover effects on the ASEAN economies. Specifically, we investigate these questions: Which ASEAN country drives the ASEAN region? Do economic shocks in a member country spill over to other member countries? If yes, what is the direction of shocks transmitted among the ASEAN countries? Are these economic shocks external to the ASEAN economies? Understanding how economic shocks are transmitted among the ASEAN countries is important because of policy implications. If ASEAN economies are susceptible to spillovers from each other (which can be positive or negative) and if we can identify the source of transmission, then the effectiveness of one's macroeconomic policy setting will greatly be enhanced. Under this scenario, policy coordination for the mutual benefit of the ASEAN member countries may be called for. In light of growing intra-ASEAN trade and investments under a more liberal economic environment, the ASEAN countries are expected to share common economic linkages so that a recession in one member country may spill over into other member countries in terms of output and employment decline. The 1985 recession and the 1997 currency crisis, for example, which hit all the ASEAN group of countries, could be a reflection of these economic linkages. The questions of which ASEAN country drives the ASEAN region and how the economic shocks are transmitted among different economies are answered by employing vector autoregression (VAR) techniques using quarterly data on real GDP for ASEAN countries, Japan and the United States for the period of 1975 to 1993. The results can be used to identify leading and lagging relationships between variables and, with further identifying restrictions, to measure the economic importance of these dynamic relationships. Variance decomposition method is used to measure the economic importance of these relationships and impulse response functions are used to trace the direction of the effects of a shock in one country on the other countries. The objective is to examine the extent to which economic fluctuations in a country are driven by its own economy, or by linkages to other countries. This article complements other work that study linkages among the ASEAN economies. Ariff (1996) studies the external effects on financial liberalization in four ASEAN members and finds that external effects induces efficiency in the financial systems. Manzur and Ariff (1995), on the other hand, examine the relationship of prices in five ASEAN economies and find that a long-run relationship holds. …

Grow, neighbour grow, grow... Neighbour be good!

Abstract: The main objective of this paper is to outline the relevance of regional externalities when explaining growth. The recent literature has already put attention to external economies or spillover effects, although in most cases it has been at firm or sectoral level. However, it is our belief that at least some types of externalities may spill over the somewhat artificial administrative barriers defining regional economies. In this sense, the paper presents a growth model that includes regional spillovers and obtains empirical evidence of their relevance for the EU regions. The methodology to empirically test and estimate regional spillovers using spatial econometrics techniques is proposed as well.Among other results, it is shown the qualitative and quantitative importance of these externalities and their relevance in the appropriate estimation of the technological parameters of the production function. This way, we are able to estimate a larger rate of convergence caused by factors within the regional economy. Besides, a 10% increase in the growth rate of the neighborgs causes a 6% increase in the growth rate of an economy, while a 10% increase in the steady state level of the neighborgs causes a 2% additional growth. The paper also aims at disentangling the sources for such externalities, considering the effects of different inputs at the neighboring regions, such as private and public capital stocks and human capital. Keywords: Regional Externalities, Growth and Convergence, Spatial Econometrics

On the dynamics of product and process innovations - A bivariate random effects probit model

Abstract: Based on a stochastic dynamic model of a firm’s optimal innovativebehavior we derive a simultaneous equation system for product andprocess innovations with intertemporal spillover effects. We estimatevarious versions of the model with dichotomous innovation data at thefirm level by using a bivariate dynamic random effects probit model. Thedata set, provided by the Ifo-Institute, covers the period between 1981and 1989 and includes 586 firms of the West German manufacturing sector.It turns out that the firms probabilities of product and processinnovations depend positively on dynamic spillover effects even if onecontrols for firm size, market concentration, demand expectations, laborcost, unobserved heterogeneity and potential endogeneity of theexplanatory variables.

Effects of One-way Spillovers on Market Shares, Industry Price, Welfare, and R&D Cooperation

Abstract: With one-way spillovers, the standard symmetric two-period R&D model leads to an asymmetric equilibrium only, with endogenous innovator and imitator. We show how R&D decisions and measures of firm heterogeneity - market shares, R&D shares, and profits - depend on spillovers and on R&D costs. While a joint lab always improves on consumer welfare, it yields higher profits, cost reductions and social welfare only under extra assumptions, beyond those required with multi-directional spillovers. Finally, the novel issue of optimal R&D cartels (with an endogenous spillover parameter) is addressed. In particular, the latter can be zero under some conditions.

Spillover Effects - An Incentive to Cooperate in R&D?

Abstract: This paper examines empirically the theoretical relationship between spillover effects, in the sense of unintended knowledge transfer, and cooperations in research and development (R&D). According to the results of a logistic regression analysis which has been based on micro-level data, firms tend to form R&D-cooperations to internalise spillover effects. While there is some evidence that this incentive increases with firm-size the results stress the importance of industry characteristics. Taking into account the pressure from existing or potential competition ambiguous effects of spillovers on R&D-cooperations may be expected. Furthermore, the influence of factors which are independent from spillover effects and a comparison of different types of R&D-cooperations point at the relevance of further motivations to co-ordinate R&D-activities in general.

Expropriation and Control Rights: A Dynamic Model of Foreign Direct Investment

Abstract: This paper studies the strategic interaction between a foreign direct investor and a host country. We analyze how the investor can use his control rights to protect his investment, if he faces the risk of "creeping expropriation" once his investment is sunk. It is shown that this hold-up problem may cause underinvestment, if the outside option of the investor is too weak, and overinvestment if it is too strong. We also analyze the impact of spillover effects, give a rationale for "tax holidays" and examine how stochastic returns affect the strategic interaction of investor and host country.

Foreign Direct Investment in a Developing Country with Economic Reform

Abstract: This paper formalizes the foreign investors' investment decision in the economic reform projects of developing countries with political instability. Although foreign direct investment (FDI) increases capital and advanced technology flows to developing countries, relatively high concentration of FDI on developed countries and on a few advanced developing countries implies bleak prospects for industrialization in the majority of developing countries. This paper explains why a majority of developing countries are seriously neglected by foreign investors. A model is developed to link the complementarity among projects to the investment responses under various information structures. For given parameter values, two main factors dampen FDI flows into developing countries: The first is the combined effect of private information and the possibility of foregone positive spillover, which lowers the incentive for FDI flows into developing countries. The second is the combined effect of the existence of multiple equilibria due to complementarity and the coordination failure arising from pessimistic expectation, which induces investors to choose a Pareto-inefficient equilibrium. While the former effect arises from the interaction of private information and complementarity, the latter effect arises from the complementarity of the reform projects regardless of the presence of private information. In the absence of project complementarity, however, the presence of private information does not make any difference in the investment decision. The paper's analysis gives the rationale for the recent institutional development in Asia of subregional economic zones and special economic zones.

Estímulos de la inversión extrajera directa sobre empresas nacionales

Abstract: This paper examines spillovers from FDI in Uruguayan manufacturing firms to determine whether foreign presence has any impact on the levels of labor productivity in local firms. We find a positive and statistically significant spillover effects in the whole sample, with a stronger impact of foreign presence on the performance of small firms. We also find positive and statiscally significant spillover effects when the organizational gap between foreign and local firms is moderate and when the technology gap is large. Our interpretation is that there are firm-specific differences in the ability to absorb spillovers.

Global transfer of arms technology and its impact on economic growth

Abstract: I. INTRODUCTION In a broad sense, technology is defined as the differences in productivity across nations (Fuhrer and Little, 1996). It is well known that technologies are embodied in physical capital. The adoption of the definition also suggests that technologies are embodied in human capital, which includes technical knowledge and labor skills, and organizational and managerial abilities as well as economic culture. Technology can be created domestically through innovation. International transfer of technology can be made through contractual arrangements such as licensing, direct foreign investments, and joint ventures. Such arrangements are made not only between businesses to transfer commercial technology but also between countries to transfer military technology (Cole and Cooper, 1996). One country also can obtain technology from another country through technology diffusion, which can be viewed as a spillover process. Jaffe (1996) suggests that there are three types of spillovers: (i) knowledge spillovers, (ii) market spillovers, and (iii) network spillovers. Knowledge spillover refers to the use of the knowledge of one agent by another with or without compensation minus the value of the knowledge. An example of this type of spillover is the departure of an economic agent from one firm to assume a position in another firm or to create a business. The career change of the agent is accompanied by a flow of knowledge from one firm to another. The impact of market spillovers occurs when new products, improved products, or existing products are marketed below their respective intrinsic value. Thus, market spillovers are expected to result in consumer surplus and cost saving. A product has a network spillover effect if its arrival is critical to the development of many technology-related products or businesses. The economic impact of arms trade on the importing countries is difficult to measure (Ferrari et al., 1987). Benoit (1973) and Neuman (1979, 1985, and 1993) suggest that arms trade accelerates economic growth, while Ball (1981, 1983) and Lim (1983) take the opposite view. The controversy is far from settled (Ferrari et al., 1987; Chatterji, 1992). Philosophical, cultural, and political differences aside, the use of different database, variables, and analytical tools contributes to this long lasting controversy. Surprisingly, none of the above-cited studies links arms trade to recent theoretical developments in technology transfer and economic growth. Thus, their conclusions lack theoretical underpinning and justification. The purpose of this paper is to provide a theoretical framework to estimate the impact of arms trade on economic growth. These impacts are measured in terms of technical changes, efficiency changes, and Malmquist indices. Because the model adopted for this study is non-stochastic, the impacts of arms trade on economic growth cannot be expressed in statistical terms. II. LITERATURE REVIEW The general technology level of an arms-importing country may be upgraded through the transfer of defense technology. This transfer may lead to human capital improvement, infrastructure construction, and installation of dual-use equipment in the recipient country (Neuman et al., 1979; Neuman, 1985; Neuman and Sahu, 1993). Estimating the impact of arms trade on economic growth requires an understanding of how the transfer of military technology affects the growth rate. The first attempt to link growth theory to military spending was made by Lim (1983), who incorporated the defense expenditure into the Harrod-Domar model. Because technology is not specifically taken into consideration in this strain of growth theory, the use of the Harrod-Domar growth model, in retrospect, might be questionable theoretically. However, this issue of technology and growth has been addressed by the neoclassical growth theory. The growth models proposed by Solow (1956) and Swan (1956) explicitly takes technology into consideration. …

Intellectual Property Rights Protection and International Trade: An Economic Survey

Abstract: Intellectual properly right (IPR) protection provides incentives for innovation and consequent spillover benefits for the global economy, but it may also have anti-competitive effects. Economic theory has only recently addressed the international trade flow implications of different IPR protection regimes—including those consistent with the TRIPS agreement. The theory suggests IPR protection offers grounds for both conflict and congruence between net technology importers (mostly developing countries) and net technology exporters. Empirical evidence suggests that IPR protection influences trade and investment flows, but that economic impacts vary across nations and industries. Debate continues over crucial measurement issues.