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International Technology Licensing, Intellectual Property Rights, and Tax Havens


Abstract: This paper investigates the determinants of international technology licensing using data for 50 countries during 1996-2012. A multi-country model of innovation and international technology licensing yields a dynamic structural gravity equation for royalty payments as a function of fundamentals, including imperfect intellectual property protection and differences in corporate taxation. The gravity equation is estimated with nonlinear methods. The model's fundamentals account for about 60% of the variation in royalty payments. A quantitative analysis sheds light on the impact of global taxation reforms on both international technology licensing and innovation. The findings highlight the crucial role of taxation in shaping cross-border flows of technology and the potential consequences of profit-shifting strategies.

Keywords: technology diffusion; royalty payments; intellectual property rights;

JEL Classification: F12; O33; O41; O47;

https://doi.org/10.20955/wp.2019.031

Status: Published in The Review of Economics and Statistics

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Provider: Federal Reserve Bank of St. Louis

Part of Series: Working Papers

Publication Date: 2023-03-31

Number: 2019-031

Note: Publisher DOI: https://doi.org/10.1162/rest_a_01382

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