Patent reforms and exporter behaviour: Firm-level evidence from developing countries

Using product-level data from 1997 to 2014, this paper examines the impact of patent reforms on the microfoundations of developing countries’ export growth. In a difference-in-difference setting, we compare exporter characteristics in sectors intensive in intellectual property (IP) relative to non-IP-intensive sectors. We find that high-IP exports expanded along the extensive (firm-count) margin around the time of the reforms, but with the passage of time expansions along the intensive (firm size) margin took on more importance. Changes in the exporting behaviour of entrants were the key drivers, while incumbents were largely unaffected. Exporter entry and exit rates in IP-intensive sectors rose after the reforms, shifting the distribution of exporters towards larger and more IP-intensive firms. The first year survival rate of entrants was unaffected, but the destination entry rate of survivors fell. The findings signify that patent reforms did influence local productive and innovative capacity of developing countries.