International Economics Commons^™

Patent Protection And The Industrial Composition Of Multinational Activity: Evidence From U.S. Multinational Firms, Olena Ivus, Walter Park, Kamal Saggi

Olena Ivus

Using data on U.S. firms' technology licensing to local agents in developing countries, this paper examines the impact of patent protection on internal and arms-length technology transfer. The effects of protection vary across products according to their complexity. Consistent with theories of internalization, we find that patent reforms enable local firms to attract more arms-length technology transfer, especially of simple products which are relatively easy to imitate. Affiliated licensing also rises among simple products, but falls among complex products. The results withstand several robustness checks, including controlling for endogeneity by using colonial origin as an instrument, and are equally strong …