Date of Submission
Open Access Senior Thesis
Bachelor of Arts
Philosophy, Politics, and Economics (PPE)
2023 Cameron W Stevens
This paper combines two datasets to identify the effect of joining a bilateral Free Trade Agreement with the United States on innovation in four select countries: Australia, Chile, Singapore, and South Korea. Using an probability concordance developed by Lybbert and Zolas (2014), I map the number of patents recorded by the World Intellectual Property Organization (WIPO) into four digit North-American-Industry-Classification-System (NAICS) codes, which are then combined with industry level trade data from the US International Trade Committee (USITC). Using a difference-in-differences regression model, I estimate that joining an FTA increases the number of annual patent filings by 44 in a given NAICS industry sector. After isolating the effects to innovation due to an industry’s exports and imports, I find that the gains in patent filings from joining an FTA are highly dependent on the level of trade with the US. I conclude that FTAs lead to a reallocation of innovation away from sectors with low trade volume and into sectors with high trade volume, but overall the innovation gains are positive. Additionally, I identify directions for new potential research based on my findings.
Stevens, Cameron, "The Effect of Free Trade Agreements on Innovation: Evidence from US Bilateral Free Trade Agreements with Australia, Chile, Singapore, and South Korea" (2023). CMC Senior Theses. 3312.