Impacts of Intellectual Property Rights on Trade Flows in ASEAN Countries

This study provides new evidence regarding the linkage between the enforcement of IPR and trade flows in ASEAN countries. Based on the analysis of a gravity model and using the categorized panel data, the study finds robust empirical results. First, reinforced IPR protection in the importing countries (non-ASEAN countries) has a positive impact on ASEAN’s exports, indicating the prevalence of the market expansion effect. Stronger effects are found in the high-tech sectors such as chemicals, machinery and transport equipment. Second, increased IPR protection in the importing countries (ASEAN) has a negative effect on ASEAN’s imports, exhibiting the dominance of the market power effect. Stronger effects are found in the manufactured goods, beverage and tobacco industries. Third, since the coefficient on the IPR index is positive and statistically insignificant, we conclude that stronger protection of IPRs in both the ROW and ASEAN leads to an ambiguous increase in bilateral trade between ASEAN and the ROW. This is because of the fact that the increase in ASEAN’s exports due to stronger IPR protection in the ROW is partly cancelled out by the decrease in ASEAN’s imports as the result of stronger IPR protection in ASEAN.