This project investigates the pattern of innovation undertaken by domestic firms in emerging economies, through the collection and analysis of patent data matched with existing firm-level datasets in India. The researcher will also examine the impact of foreign multinationals’ use of Intellectual Property Rights (IPR) protection on domestic firms.
While countries like India, China, and Brazil are transitioning from technology imitators to technology producers, at present, relatively little is known about innovation in emerging economies. This limited understanding is due primarily to a lack of data. This study will help fill this knowledge gap by constructing a novel database linking firm-level datasets with detailed data (already collected by the research team) on all patents granted from 1995-2008 in India. India is an interesting economy to focus on because it is a large emerging economy with a well-developed and widely-used patent system, a number of innovative domestic firms and a significant amount of Foreign Direct Investment (FDI).
The research team will match their Indian patent data with firm-level data from the Prowess dataset, which covers 5,000 of the largest firms in India. These data will provide a high level of detail – output, sales, and expenditures (including R&D investments) -- for most of the Indian firms which are likely to be actively patenting. U.S. patent data (linked to U.S. firm-level data) will also be used to investigate which types of foreign firms are choosing to protect their intellectual property in India, which types of inventions they are choosing to protect, and how their ability to take advantage of IPR protection affects foreign firms' FDI and export decisions.
An important aspect of this project is that the Indian patent system underwent a series of significant changes over the period covered by the patent data. India joined the World Trade Organization (WTO) in 1995 and, as a member, had to amend its Patent Act several times in order to comply with the TRIPS agreement which regulates IPR protection. These changes (in 1999, 2002, and 2005) provide a set of natural experiments which can be used to identify the causal impact that IPR laws had on innovative activity.
IPR protection laws have been subject to much controversy in the past two decades, as their impact on domestic innovation rates is theoretically ambiguous. Some argue that strengthening IPR protection is beneficial for emerging economies, because it increases FDI and positive spill-overs between multinational and domestic firms in emerging economies. Others believe that increased IPR protection is unambiguously bad for emerging economies, since it may slow their growth by stifling imitation. Gaining a better understanding of the net impact of IPR protection in emerging markets has the potential to influence this important policy debate.
Authors
