Date of Award

Spring 1-1-2013

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

First Advisor

Keith Maskus

Second Advisor

Wolfgang Keller

Third Advisor

Scott Savage

Fourth Advisor

Thibault Fally

Fifth Advisor

Andy Baker

Abstract

The purpose of my dissertation is to evaluate different aspects of the impact of an intellectual property rights (IPR) reform in developing economies. There are a few ways in which the reform will affect the economy. Specifically, I focus on the effect that IPR have on the decision of a multinational enterprise (MNE) to enter the host economy. Moreover, it is of great importance the impact of the IPR reform on the productivity of domestic firms through vertical linkages. These are the main topics of my dissertation.

The first chapter is a brief introduction, while in the second chapter, I provide an theoretical framework that motivates the empirical work of later chapters. The theoretical framework hinges on the MNEs decision of entering the host country through either foreign direct investment (FDI) or licensing.

In the third chapter I provide an overview of the country and the dataset to be used in the rest of the dissertation. I use Chilean plant-level data for the 2001–2007 period. It is crucial to note that the institutional framework of the country can affect the type and intensity of foreign presence adopted by MNEs in the host country. Therefore, it is important to analyze the effect of a change in the institutional framework, not only on foreign presence, but also on how domestic firms react to that change. This can be achieved by analyzing a set of new and stronger IPR implemented in 2005.

In the fourth chapter, I study licensing as one of the channels for technology transfer to domestic plants. This technology transfer can occur in one industry and also in related industries, which results in technology spillovers that can affect both intra- and inter-industry productivity. Note that, it is important to measure productivity as accurately as possible in order to search for spillover effects. Thus, the newest methods are used. I find that there is strong evidence for backward spillover effects. Moreover, these effects are reduced in the face of stronger IPR. I also find that the change in policy has a stronger effect on firms that are, on average, smaller and have low productivity.

Finally, I analyze the effect of stronger IPR on the choice of entry mode by MNEs into the Chilean market. MNEs can choose between exporting, introducing FDI and licensing to a domestic firm in Chile. I test the effect of the change in IPR on the overall foreign presence in Chile, controlling for the activity of industries where high levels technology transfer and imitation constitute an important factor. The main results show that due to increased IPR strength, the mode of entry chosen by MNEs change. In this case, FDI is replaced by licensing. This result could be explained by the higher production capacity in Chile during this period.

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