Are U.S. exports influenced by stronger IPR protection measures in recipient markets?

U.S. exporters have choices when it comes to determining in which markets to sell their firms’ products and services. These choices depend on several factors, including market size, income levels, price sensitivity, competition, consumer preferences, and other demand conditions in the recipient markets. Cost considerations also play an important role in determining to which markets firms export, especially those associated with transportation, tariff and non-tariff barriers to trade, legal and translations services, and logistics support for vertically integrated supply and distribution channels. However, the inclusion of intellectual property rights (IPR) considerations has not been integral to the well-established literature on firms’ export determinants. Using a comparative indicator of IPR protection measures in various countries, this article isolates the effects of IPR protection as a determinant to U.S. export activity. The results show that growth in U.S. exports has been correlated with improvements in IPR protection in foreign markets over the considered period and that the magnitude of this correlation has varied markedly by sector and country. High-technology sectors, such as semiconductors as well as synthetic rubbers and fibers, exhibited the greatest sensitivity to improvements in IPR protection mechanisms in the considered period while improvements in IPR protection in markets like Mexico, China, and Japan were correlated with disproportionately high positive effects on U.S. export performance.