Randomized trial examines how strong intellectual property rights boost foreign investment in industries, suggesting greater protection benefits inclusion.
This paper examines the impact of regional intellectual property rights (IPRs) on outward foreign direct investment (FDI). We estimate a bilateral FDI gravity equation for six manufacturing industries sourced from Europe and the U.S. We use multiple measures of IPR protection contained in US, EU and EFTA regional trading trade agreements. We find that IPR protection that exceeds the multilateral TRIPS agreement has a positive impact on all industry-level FDI. The estimates imply that an additional TRIPS-plus (and TRIPS-like) provision raises FDI by 3.6% (metals) to 11.6% (chemicals). Our results are robust to the removal of tax haven countries from our sample and allowing differential effects for EU and non-EU agreements.
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Yamarik et al. (2026) studied this question.
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