NO : WP-2025-025
AUTHOR : Ridwan Ah Sheikh and Sunil Kanwar
TITLE : Revisiting the Impact of TRIPS on Trade: Evidence from Staggered Difference-in-Differences
ABSTRACT :
This paper uses an extended two-way fixed effects (ETWFE) estimator for staggered difference-in-differences to evaluate the impact of compliance with the 1995 agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) on international trade. Uti¬lizing various partial aggregation schemes to summarize treatment effect heterogeneity across different dimensions, we provide evidence that: (i) On average, compliance with the TRIPS agreement have led to an increase of about 58% in trade among member countries; (ii) Our results demonstrate significant heterogeneity across treatment-timing cohorts, with relatively larger effects observed for those that complied with the agreement earlier; (iii) The event-study estimates suggest that trade flows exhibit a sustained positive response to TRIPS, rising for about 11 years since the agreement’s inception before eventually declining; (iv) The con¬clusions based on aggregate trade flows remain valid across different industries that exhibit greater sensitivity to intellectual property. In so far, the existing literature have largely relied on conventional two-way fixed effects (TWFE) regressions, which may yield biased estimates in a setting with staggered treatment adoption and treatment effects heterogeneity. The contri¬bution of this paper is to use the recent heterogeneity-robust difference-in-differences methods to address the trade effects of TRIPS due to its staggered pattern of compliance.
Keywords: TRIPS, International Trade, Staggered Difference-in-Differences, Treatment Ef¬fect Heterogeneity.
JEL Code: C21, C23, F13, F14, O34
Weblink: http://www.igidr.ac.in/pdf/publication/WP-2025-025.pdf
