THE EFFECT OF INTELLECTUAL PROPERTY-RIGHTS ON INTERNATIONAL-TRADE ANDINVESTMENT

The widespread debate regarding extended recognition of intellectual p roperty rights across borders has not been matched by empirical invest igation regarding the effect of such international recognition of inte llectual property as exists in the status quo. In this paper, the effe cts of membership in intellectual property treaties is investigated in the context of U.S. exports, foreign affiliate sales, and flows of ro yalties and license fees. Membership in intellectual property treaties increases the flows of payments and receipts for intellectual propert y as long as domestic patent protection is sufficiently strong. U.S. p arents export more to subsidiaries in countries which do not adhere to such treaties, but their impact on arms'-length exports and foreign i nvestment is minimal.