With whom do you trade? Defensive innovation and the skill-bias

With whom do you trade? Defensive innovation and the skill-bias

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Article ID: iaor20106985
Volume: 43
Issue: 4
Start Page Number: 1198
End Page Number: 1220
Publication Date: Nov 2010
Journal: Canadian Journal of Economics/Revue canadienne d'conomique
Authors: ,
Keywords: measurement
Abstract:

We examine whether increased trade with countries with ineffective protection of intellectual property has contributed to the skill-deepening of the 1980s. We construct an index of effective protection of intellectual property at the country level, combining data on protection of patents and rule of law. Next, we construct an industry-specific version of this index, using as weights each country's trade share in the total trade of the industry. We find a decline in this trade-weighted index, owing to a rise in trade with countries with low effective protection of intellectual property, which explains 29% of the rise in within-industry skill-intensity.

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