Do Trade Agreements Contribute to Technology Internationalization?

This paper investigates the effect of free trade agreements (FTAs) on technology internationalization. We estimate the effect of FTAs on domestic ownership of foreign inventions with a gravity model using a panel of 6,480 country pairs of high- and middle-income countries for the period 1980-2015. The main results indicate that FTAs lead to a significant increase in technology internationalization, especially when the FTAs cover trade in goods and services. This effect increases over time considering the period of implementation, subsequent to the ratification and depends on the policy scope of the FTA and the economic distance between trading partners. Moreover, countries that are geographically and institutionally closer exchange more knowledge and technology and provisions on intellectual property rights add to the positive effect.