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With whom do you trade? Defensive innovation and the skill-bias

Author: Dutt, Pushan ; Traça, Daniel A.INSEAD Area: Economics and Political Science Series: Working Paper ; 2010/12/EPS Publisher: Fontainebleau : INSEAD, 2010.Language: EnglishType of document: INSEAD Working PaperAbstract: We examine whether increased trade with countries with ineffective protection of intellectual property has contributed to the skill deepening of the 1980s. We construct an index of effective protection of intellectual property at the country level, combining data on protection of patents and rule of law. Next, we construct an industry-specific version of this index, using as weights each country’s trade share in the total trade of the industry. We find a decline in this trade-weighted index, due to a rise in trade with countries with low effective protection of intellectual property, which explains 29% of the rise in within-industry skill intensity.
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INSEAD Working Paper Asia Campus
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Print Available BC009033
INSEAD Working Paper Europe Campus
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Print Available BC009032
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We examine whether increased trade with countries with ineffective protection of intellectual property has contributed to the skill deepening of the 1980s. We construct an index of effective protection of intellectual property at the country level, combining data on protection of patents and rule of law. Next, we construct an industry-specific version of this index, using as weights each country’s trade share in the total trade of the industry. We find a decline in this trade-weighted index, due to a rise in trade with countries with low effective protection of intellectual property, which explains 29% of the rise in within-industry skill intensity.

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