Answer first: A 2019 analysis by economist Ana Maria Santacreu demonstrates that countries with stronger intellectual property rights (IPR) protection receive more international technology transfers, measured through royalty payments. The study reveals that developing nations typically have weaker IPR enforcement and consequently r…
Licensing context for IP teams
Effective protection and enforcement of intellectual property rights (IPR) are fundamental to promoting international technology transfer, a key driver of economic growth, particularly in developing countries. In a 2019 unpublished manuscript, economist Ana Maria Santacreu employed data on royalty and licensing fees from 54 countries spanning 1995 to 2012 to quantify international technology transfer. Royalty payments, which represent charges for the use of foreign IPR, serve as a reliable proxy for knowledge diffusion across borders.
The Organization for Economic Cooperation and Development (OECD) compiles data on cross-country transactions involving proprietary rights—including patents, trademarks, copyrights, industrial processes, trade secrets, and franchises—in its EBOPS 2002 Balanced International Trade in Services database. This dataset underpins Santacreu’s analysis of how IPR protection influences technology flows.
Key takeaways for intellectual property rights protection
- Confirm how the development affects licensing ownership, enforcement, licensing, or portfolio records.
- Separate confirmed facts from legal interpretation before advising business teams.
- Map deadlines, affected assets, contracts, and evidence files to the responsible internal owner.
- Use the issue as a prompt for monitoring, filing strategy, dispute preparation, or member education.
Practical analysis
Santacreu found a positive correlation between the volume of royalty payments a country makes to foreign entities and the quality of its IPR protection, as measured by the Intellectual Property Protection Index from the World Economic Forum’s Global Competitiveness Index historical database. This index assesses the strength of a country’s enforcement of intellectual property laws.
The research highlights a significant disparity between developed and developing countries. Developing nations, such as Argentina, India, and Peru, generally exhibit lower GDP per capita and weaker IPR enforcement. Conversely, developed countries like the United States, Ireland, and Canada show higher GDP per capita alongside stronger IPR protection. This disparity results in developing countries receiving less foreign technology, likely due to inadequate enforcement standards that deter technology transfer.
Data visualizations in the study illustrate that countries with higher GDP per capita not only maintain stronger IPR enforcement but also make greater royalty payments internationally, signaling substantial technology acquisition. However, some countries deviate from this trend. China, for example, stands out as an outlier by making significant royalty payments despite having relatively lower GDP per capita and weaker IPR enforcement compared to developed nations.
This anomaly suggests that China is rapidly advancing in technological innovation and knowledge sharing. Santacreu and co-author Makenzie Peake explored this phenomenon in a 2019 Federal Reserve Bank of St. Louis Economic Synopses essay, which examined China’s substantial royalty payments as evidence of improving IPR enforcement and increased engagement with global technology markets.
Adopting foreign technologies is a crucial mechanism for countries distant from the global technology frontier to develop. By learning from external innovations, these nations can build their own innovative capacities and eventually contribute to advancing the frontier themselves. Santacreu’s 2015 research in the Journal of Monetary Economics further elaborates on the interplay between innovation, diffusion, and trade in this context.
The findings underscore the importance of economic policies aimed at enhancing the quality of IPR protection. Strengthening IPR frameworks facilitates technology transfer, enabling developing countries to accelerate growth and innovation. As such, policymakers should prioritize reforms that bolster IPR enforcement to unlock the benefits of global knowledge diffusion and foster sustainable economic development.
1. Santacreu, Ana Maria. “A Gravity-Approach to International Technology Transfer: The Role of Intellectual Property Rights.” Unpublished manuscript, 2019.
2. Santacreu, Ana Maria. “Does Trading with the U.S. Make the World Smarter?” Federal Reserve Bank of St. Louis, On the Economy Blog, May 11, 2017.
3. Branstetter, Lee. “Is Foreign Direct Investment a Channel of Knowledge Spillovers? Evidence from Japan’s FDI in the United States.” Journal of International Economics, March 2006, Vol. 68, Issue 2, pp. 325-44.
4. Santacreu, Ana Maria. “Trading Ideas between Countries.” Federal Reserve Bank of St. Louis, On the Economy Blog, April 17, 2017.
5. Santacreu, Ana Maria; Peake, Makenzie. “A Closer Look at China’s Supposed Misappropriation of U.S. Intellectual Property.” Federal Reserve Bank of St. Louis, Economic Synopses, February 2019.
6. Santacreu, Ana Maria. “Innovation, Diffusion, and Trade: Theory and Measurement.” Journal of Monetary Economics, October 2015, Vol. 75, pp. 1-20.
Related IIPLA reading
Strong Intellectual Property Rights Protection Drives International Technology Transfer and Economic Growth A 2019 analysis by economist Ana Maria Santacreu demonstrates that countries with stronger intellectual property rights (IPR) protection receive more international technology transfers, measured through royalty payments... Read the full IIPLA blog post: https://iipla.org/blog/strong-intellectual-property-rights-protection-drives-international-technology-transfer-and-economic-growth