Assessing the Impacts of Intellectual Property Rights on Trade Flows in Latin America

Feb 2006
The protection of intellectual property has been a subject of great contention between developed and developing countries in recent years. Although the Agreement on TRIPs was signed by the members of the World Trade Organization (WTO) during the Uruguay Round of trade negotiations, its provisions are still viewed with animosity by many developing countries. A complete evaluation of the net effects of the TRIPs agreement in developing countries would require a broad assessment of all the costs and benefits described above. This is a formidable task that goes beyond the scope of this paper. Here, we concentrate on a rather small task and analyze the effects of IPRs over the flows of international trade flows, particularly to Latin America. As stated above, trade flows, and especially, flows of high-technology goods can be a source of technology diffusion. In that sense, exploring whether the international flows of high-technology goods are sensitive to IPRs protection in Latin America can be useful if one would like to consider the appropriateness of using intellectual property as a tool to promote technology diffusion throughout the region. Section II presents a brief theoretical background on the relationship between IPRs and trade flows. After a brief review of the empirical literature, Section III describes the data, the econometric model and the results. This section also provides some insights and potential implications of the main findings. Finally, Section IV concludes.