Do Foreign Patent-Protection Rights Promote Domestic R&D Spending? Evidence from Canadian Firms

October 2015

Mauricio Zelaya
Research and Analysis Directorate,
Small Business Branch
Industry Canada

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© Her Majesty the Queen in Right of Canada,
as represented by the Minister of Industry, 2015
Cat. No. Iu188-124/2015E-PDF
ISBN 978-0-660-02655-8

Aussi offert en français sous le titre Les droits de protection que confèrent les brevets étrangers stimulent-ils les dépenses nationales en R-D? L'expérience des entreprises canadiennes, octobre 2015.

Summary:

This paper examines the evolving role of intellectual property rights (IPR) in the context of globalization, where research and development incentives of Canadian firms are framed not only by Canadian IPR, but also by the IPR of Canada's export market.

Contents

Abstract

This paper examines the evolving role of intellectual property rights (IPR) in the context of globalization, where research and development incentives of Canadian firms are framed not only by Canadian IPR, but also by the IPR of Canada's export market. Using a unique Canadian export firm, product-level dataset, the empirical approach employed in this study explores the differentiated products in industries from firms that can impact business enterprise R&D intensity over a period of nine years. These results are empirically tested by constructing an export-weighted index of trade-partner IPR at the firm-product level. Controlling for year, industry and firm-level fixed effects, the results suggest that Canadian innovation is positively associated with export-partner IPR. These results seem to suggest that policy-makers should explore alternative avenues to design an optimal national property rights regime. The results would further justify the need for multilateral IPR agreements or, more generally, a global IPR framework.

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