Fixed Effect Estimation of Patents and FDI: India and Its Economic Partners

Abstract

Economic globalization has facilitated business enterprises making use of trade agreements, FDI inflows and intellectual property related assets beyond national boundaries.The introduction of IPR related chapters in trade agreements especially the patent system is fostering innovation, and economic development in the country. India has signed CEPA (Comprehensive Economic Partnership Agreement) and CECA (Comprehensive Economic Cooperation Agreements) which has been instrumental in building integration of intellectual property rights compared to other bilateral trade agreements.

This paper analyses the impact of FDI inflows on the number of patent applications filed in India by those countries which are part of CECA, CEPA and other trade treaties. A Year Fixed Effect methodology for a group of 11 countries is used to study the qualitative and quantitative estimation. The time period between 2005 and 2022 has been used in the estimation.The empirical findings support the hypothesis that countries under CECA and CEPA have significant positive results on investment inflows and filings of patent in India. Furthermore, India should design its trade policies like CECA/CEPA to help induce high quality FDI drive India towards creation of knowledge-based economy.