| Pushan Dutt |
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Abstract: This paper tests the hypothesis that increased trade with countries with weak or ineffective protection of intellectual property has contributed to the skill deepening of the 1980s. We draw on Thoenig and Verdier’s (2003) theory that the threat of competitive imitation from countries where the protection of intellectual property rights (IPR) is low promotes skill-biased strategies and technologies, which are less likely to be imitated. We first construct an index of effective protection of intellectual property at the country level, combining data on the statutory protection of patents and the rule of law (as a proxy for enforcement). Next we construct an industry-specific version of this index, using as weights each country's trade share in the total trade of industry. We find an important and pervasive decline in this trade weighted index, due to a rise in trade with countries with a low effective protection of intellectual property, which explains 29% of the rise in within-industry skill intensity. Online Appendix Please see for additional results
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