Domestic intellectual property rights protection and exports: Accessing the credit channel

Recent studies on the export effects of domestic intellectual property rights protection focus on the innovation, border and technology transfer channels to underscore the pathways by which effective domestic IPRs protection influences own country's export. I extend this literature by arguing that another pathway domestic IPRs protection affects own country's export is via the credit channel i.e. firms access to external finance. Among many others, this occurs because effective domestic IPRs protection creates a scenario wherein exporters can use their intellectual properties in the same way they use tangible assets as collateral in order to overcome the huge variable and upfront fixed costs they face. To underscore this pathway, I evaluate the export effect of domestic IPRs protection within the comparative model framework and find empirical evidence for my hypothesis, with the results indicating that countries with more effective IPRs protection export more from sectors that depend more on external finance and that have more intangible assets.

JEL Classification: F10, F13, F14, F36, O333, O34

Keywords: Intellectual Property Rights; Exports; Access to Finance