International Technology Licensing, Intellectual Property Rights, and Tax Havens

RePEc Short ID: psa547
ORCID iD: 0000-0002-3788-4511

Santacreu, Ana Maria

doi:10.20955/wp.2019.031

Working Paper Revision

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