Concepedia

Do National Patent Laws Stimulate Domestic Innovation in a Global Patenting Environment? A Cross-Country Analysis of Pharmaceutical Patent Protection, 1978–2002

The Review of Economics and Statistics · 2007 · 484 citations · 38 references

TL;DR

The study examines how the introduction of pharmaceutical patent laws in 26 countries between 1978 and 2002 affected domestic innovation. Using matched sampling to create comparable country pairs among 92 sampled nations and country‑pair fixed‑effects regressions, the authors obtain robust estimates of patent law impacts. Results show that patent protection alone does not boost domestic innovation, but higher economic development, education, and freedom accelerate it, and beyond an optimal IP‑rights level further tightening actually dampens innovation.

Abstract

This paper evaluates the effects of patent protection on pharmaceutical innovations for 26 countries that established pharmaceutical patent laws during 1978–2002. Controlling for country characteristics through matched sampling techniques to establish two proper comparison sets among 92 sampled countries and through country-pair fixed-effects regressions, this study yields robust results. National patent protection alone does not stimulate domestic innovation, as estimated by changes in citation-weighted U.S. patent awards, domestic R&D, and pharmaceutical industry exports. However, domestic innovation accelerates in countries with higher levels of economic development, educational attainment, and economic freedom. Additionally, there appears to be an optimal level of intellectual property rights regulation above which further enhancement reduces innovative activities.