Ana Maria Santacreu, Saint Louis FED

"International Technology Diffusion: A Gravity Approach"


This paper investigates empirically the determinants of international technology licensing using data for 61 countries during 1995-2012. A multi-country one-sector model of innovation and diffusion with perfect enforcement of IPR yields a structural gravity equation for bilateral royalty payments as a function of economic fundamentals. The gravity equation is estimated using nonlinear methods. The model’s fundamentals account for 45% of the variation in royalty payments. Other factors such as imperfect IPR protection and a country’s production structure account for a substantial fraction of the unexplained variation, especially in developing countries. A back-of-the-envelop calculation suggests that perfect IPR enforcement in China would have led to 20% more technology transfers from the United States.

Contact person: Birthe Larsen