Patent Laws, TRIPS, and Economic Growth: Evidence from China

Belton M. Fleisher*, Ohio State University, Central University of Finance and Economics & IZA
William H. McGuire, Ohio State University
Adam N. Smith, Ohio State University
Mi Zhou, Agricultural Bank of China

Abstract
We analyze the impact of intellectual property rights (IPR) protection on factors contributing to China’s economic growth. We use a difference-in-difference estimation procedure and hold constant the effects of Deng Xiaoping’s South Trip and China’s accession to WTO. The null hypothesis that the 1992 and 2002 patent laws, including China’s adoption of TRIPS standards did not directly affect China’s  productivity, inward foreign direct investment, or domestic research and development activity is not rejected. 

JEL Codes: O31, O33, O34

Key words: Patent law, Intellectual Property Rights, TRIPS, TFP Growth

Trade and Intellectual Property Rights as Channels for Economic Growth

Kai Wu, Xi’an Jiaotong University, China
Hong Cai, Xi’an Jiaotong University, China
Renai Jiang*, Xi’an Jiaotong University, China
Gary H. Jefferson, Brandeis University, USA

Abstract
This paper investigates two prominent potential drivers of long-run economic growth: a country’s trade regime and its intellectual property rights (IPR) regime, as well as their interaction. We characterize the combination of these policy-driven regimes as a country’s technology development regime. To test the importance of our specification of the technology regime, the paper derives a parsimonious model for testing their impact on the growth of living standards. The empirical analysis is conducted using a panel of 24 developed countries and 78 developing countries spanning 1980 to 2005. Our estimates highlight the importance of the technology development regime variables in driving the growth of GDP per capita. In particular the IPR regime stands out for its direct impact on growth and as a channel through which trade interacts to impact growth. The results support the view that a country’s graduating into the ranks of higher-income status may require that both IPR and trade regimes, particularly the former, be well developed.

JEL Classifications: O4; O32; O11

Do Foreign Product Standards Matter?
Impacts on Costs for Developing Country Exporters

Keith E. Maskus*, University of Colorado at Boulder
Tsunehiro Otsuki, Osaka University
John S. Wilson, The World Bank

Abstract
We estimate the impact on production costs of firms in developing countries from conforming to regulations imposed by major importing countries, using firm-level data from 16 developing countries.  The findings indicate that standards increase variable production costs by requiring additional labor and capital.  A one-percent increase in initial investment to meet foreign compliance costs raises variable costs by between 0.06 and 0.13 percent. Fixed costs of compliance are non-trivial, averaging about 4.7 percent of annual variable costs.  The cost impacts might be an important determinant of export success for firms in developing countries.  The results may provide one indication of the potential barriers to trade facilitation that technical regulations can pose.

JEL Codes: F1, L15

Are Elite University Graduates Aiding China’s Transition to an Innovation-based Economy? Results from a Career Choices Survey among Would-be Innovators in China and the United States

Linxiu Zhang, Chinese Academy of Sciences, China
Eli Pollak, Ross Darwin, Matthew Boswell, and Scott Rozelle*, Standford Unviersity, USA

Abstract
This paper reports on a survey conducted among more than 800 engineering students at elite universities in China and the United States. Results from the survey reveal that US and Chinese students are roughly equivalent in their desire to form or join startup ventures. Far more US students, however, plan on actually doing so. In contrast, Chinese students are more likely to join the state/government sector. Our results also reveal a wide gap in perceptions on the availability of financing, mentorship and other innovation resources. The findings suggest that the innovation ecosystem in China remains underdeveloped in certain important respects.

Market Structure in The Chinese Steel Industry

Jiandong Ju*, University of Oklahoma, USA, and Tsinghua University and Center for International Economic Research, China
 Li Su, University of Oklahoma

Abstract
Trade in intermediate goods has become a significant feature of the international economy. Nevertheless, questions regarding price negotiation and the determinants of importing firms' profitability remain unanswered. Using firm level data, we attempt to address these issues in the context of the Chinese steel industry. Despite being the largest producer of steel in the world, the Chinese steel industry has maintained a very low level of profitability. This paper suggests that the low profitability of Chinese steel producers results from the abnormally high degree of market segmentation in China. Using a recently developed econometric method in panel data spatial analysis, we explain the level of geographic fragmentation in the Chinese steel industry. Our results reveal that local steel production depends only on local demand rather than on cross-regional demand. Production is responsive, as a 10% increase in local GDP induces more than 8% increase in local steel production, while the cross-province spill-over demand is insignificant under several reasonable model specifications. Less efficient firms survive because of the segmented market. As a result, Chinese steel producers realize lower prot in the face of high input prices.

Keywords: Chinese Steel Industry; Market Structure; Spatial Analysis.

Corporate Social Responsibility and the Pollution Haven Hypothesis: Evidence from Multinationals' Investment Decision in China

Maoliang Bu, Nanjing University, China
Zhibiao Liu, Nanjing University and Jiangsu Provincial Academy of Social Science, China
Marcus Wagner, Julius Maximilians University, Germany
Xiaohua Yu*, University of Goettingen, Germany

Abstract
This paper tests the pollution haven hypothesis by examining the relationship between environmental regulation and foreign investment with consideration of the role of corporate social responsibility, which has so far been neglected. Using multinationals’ investment data from China, our results in general support the pollution haven hypothesis that less stringent environmental regulation is more attractive for multinationals to invest in China, but high social responsibility can counteract attractiveness of weak environmental regulation.

Keywords: pollution haven hypothesis, corporate social responsibility, foreign direct investment, environmental regulation, China