Date of Award

6-2011

Document Type

Open Access

Degree Name

Bachelor of Arts

Department

Economics

First Advisor

Mehmet Sener

Language

English

Keywords

Intellectual Property, reform, GDP, exchange, data

Abstract

Over the past several decades, Foreign Direct Investment (FDI) flows across the globe have increased markedly. During this same period, a large number of countries have strengthened their Intellectual Property Rights (IPRs) regimes in response to global legislative changes such as the Agreement of Trade-Related Aspects of IPRs or domestic policy initiatives. In this thesis, I empirically investigate the impact of IPR reform on FDI activity. I use a panel data set that consist of FDI flows from Germany and US into 15 host countries over a 24 year time period. As a proxy for IPR regime change I use the patent reform dummy developed by Branstetter et al. (2006, QJE). I use a difference-in-difference regression approach, accounting for fixed country effects and fixed time effects. I also control for GDP per-capita, GDP, real-exchange rate and trade openness. The results imply that following IPR reform there is a statistically significant and quantitatively substantial increase in FDI inflows. The findings are robust under a number of different specifications. In addition, I find that richer countries receive higher levels of FDI inflows following IPR reform using U.S parent data. However, following IPR reform, with German parent data indicates that richer countries receive lower levels of FDI.

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