Abstract
This paper examines the impact of intellectual property rights (IPR) infringement on the input (R&D spending) and output (patents) of the research process. The extant literature proxies IPR enforcement via composite indices or indicators of institutional quality, whereas this paper employs a direct (hard) measure of IPR crimes. Using data across U.S. states, results show that IPR crimes reduce research spending but do not impact patenting. Upon comparison with a broader measure of weak institutional quality (corruption), we find that greater corruption has a robust negative effect on patenting, but not on R&D spending. Quantitatively, the elasticities of R&D spending with respect to IPR crimes are greater than those of patents with respect to corruption, suggesting that studies that proxy IPR crimes via other measures are likely underestimating their impacts on technological change.
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Notes
Examples of related institutions are those dealing with governance, economic freedom and IPR protection (see Krammer 2015).
Along another related dimension, corruption and rent-seeking might impact the scope of patents (Goel 2002).
In light of the well-known multidimensional nature of corruption, one could argue that R&D and patents could have reverse feedbacks on corruption. This seems less likely with the state-dependent nature of most R&D. Further, the cross-sectional nature of our data mitigates these concerns (which could be examined with appropriate data in due course). Also see Sect. 4.5.
The insignificance of state size can partly be understood in the context of information leakages or spillovers via the internet, since such spillovers are less constrained by physical borders or state size.
There is more than one way to conduct mediation analysis. Our analysis was conducted using the “sem” command in STATA (for details, see https://stats.idre.ucla.edu/stata/faq/how-can-i-do-mediation-analysis-with-the-sem-command/).
For example, the direct effect of corruption would be (∂PATENT/∂CORRUPT), and the indirect effect would be (∂PATENT/∂TotalR&D)(∂TotalR&D/∂CORRUPT), and likewise for the case of IPRcrime.
This insignificance of IPRcrime is in line with the lack of significance in related correlations in Table 2.
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I would like to thank Al Link and German Blanco for useful insights.
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Goel, R.K. IPR infringement in the United States: impacts on the input and output of R&D. J Technol Transf 45, 481–493 (2020). https://doi.org/10.1007/s10961-018-9708-y
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DOI: https://doi.org/10.1007/s10961-018-9708-y