| Abstract: |
This paper examines the impact of preferential trade agreements (PTAs) and
deep trade agreements (DTAs) containing intellectual property rights (IPRs)
provisions on export flows, for a panel of 87 countries spanning 1990-2017. We
estimate a structural gravity model using the Poisson Pseudo-Maximum
Likelihood (PPML) framework that simultaneously accounts for
heteroskedasticity and a preponderance of zeros in trade flows, and include a
rich set of fixed effects to account for multilateral resistance factors and
endogeneity in binary trade agreement indicators. We introduce treatment leads
and lags to account for anticipatory and phased-in effects of our key trade
policy instruments. Our estimation results reveal, first, that there are no
significant contemporaneous effects of PTAs or DTAs with IPRs-provisions on
export flows. Any discernible effects manifest over time, as businesses
gradually adapt to changes in tariff and non-tariff barriers. Second, the
heterogeneous impact of deep versus shallow agreements does not appear to
matter in our sample. Third, the depth of PTAs though positive significant, is
economically small in magnitude. However, the depth of IPRs-related provisions
and alternative policy areas within IPRs reveals a significantly negative
impact on export flows.This indicates that the inclusion of additional
provisions actually diminishes trade volumes, one conceivable explanation for
which might be that the increased complexity of IPRs-related provisions in the
DTAs renders compliance with the agreements more challenging. Fourth, our
results indicate a lagged response of both PTAs and IPRs on high-IP and low-IP
export flows. The patent-related, copyright-related and trademark-related
provisions have a lagged impact on trade flows in the patent-intensive,
copyright-intensive and trademark-intensive industries, respectively. Our
findings suggest that IPRs promote trade contemporaneously in specific
industrial clusters, demonstrating increased sensitivity to intellectual
property. Our results are robust to various checks. |