We test whether the strict intellectual property protection regulations required by the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement benefit developing countries, specifically by attracting private US research and development funds. We examine the level of country-specific research and development (R spending by foreign affiliates of US-owned multinational companies between 1989 and 2003 as a function of whether the country has adopted two of the major patent protection regulations required by TRIPS – patent protection for a duration of twenty years and patent protection for pharmaceuticals. Results from the regression analysis suggest that providing a patent protection duration of twenty years positively impacts the R&D spending while providing patent protection for pharmaceuticals does not impact it. As such, pharmaceutical patent protection should be enforced in a case-by-case manner, whereas twenty-year patent protection should be broadly undertaken.
Journal of World Trade