The Role of TRIPS in Encouraging Diffusion of Pharmaceutical Technology to Developing Countries

One of the explicit goals of the 1995 TRIPS Agreement is promotion of technological innovation and transfer and dissemination of technologies worldwide. We statistically assess the relative impact of TRIPS on technology diffusion in the life sciences sector, using a longitudinal panel dataset that covers a wide range of developing countries for the period 1995 to 2017. We focus our examination of pharmaceutical technology diffusion on three indicators of knowledge production and transfer: scientific publications as an indicator of basic research; pharmaceutical patent applications by domestic inventors; local activity in clinical trials; and knowledge sharing through licensing. Controlling for a variety of potential confounding factors, we find that the pharma-specific provisions in TRIPS have a positive and statistically significant association with these measures of technology diffusion: adoption of TRIPS provisions is associated with a 67% increase in basic research in life sciences; a 30% increase in commercial research; 18% greater participation in drug development; and a 53% increase in knowledge transfer through licensing. These findings suggest significant economic benefits to countries that provide stronger protection of IP for pharmaceuticals, through increased domestic investment in the pharmaceutical sector, and more rapid and extensive technology diffusion