Export quality and patent protection: Stage‐dependent effects in development. Issue 2 (10th November 2020)

• Record Type: Journal Article
• Authors: Liu, Yan; Park, Walter G.; Fu, Dahai
• Is Part Of: Review of development economics. Volume 25:Issue 2(2021)
• Page Start: 601
• Page End: 629
• Publication Date: 2020-11-10
• Subjects: developing economies -- export quality -- patent rights -- technological stage dependence; Economic development -- Periodicals; 330
• DOI: 10.1111/rode.12737
• Languages: English
• ISSNs: 1363-6669

Abstract

Abstract: This paper provides empirical evidence on the effects of patent protection on the vertical innovation of developing country exporters. We find that the relationship between export quality upgrading and patent protection is dependent on the technological stage of an economy. Specifically, patent protection promotes quality growth if an economy's product quality is sufficiently close to the world frontier level. We characterize the density of the distribution of country products, determining the share of country–product combinations that fall under or pass a threshold, and draw some implications for patent policy design. While a majority of combinations exceed the critical threshold, the results nevertheless call for differentiation in the strength of patent protection by income group and product class. To establish these findings, we employ a very extensive index of export product quality at the four‐digit SITC level and utilize a country‐level measure of effective patent protection for the period 1990–2010.