Can intellectual property protection promote domestic value added in exports? Evidence from mainland China

Based on a unified framework, this study explores the influence of regional intellectual property protection (IPP) on domestic value added in exports. A theoretical model is constructed to illustrate that IPP affects the types and prices of intermediate goods through effects of market power, product category, and crowding-out, influences the choice of domestic and imported raw materials, and finally affects the domestic added value in exports of enterprises. Empirical evidence on the influence of IPP on the domestic added value in exports is provided utilizing China Customs Statistics, the Chinese Industrial Enterprise Database, and Chinese prefectural-level data from 2000 to 2007. The results show that IPP significantly promotes the domestic value added of exports in China, but the effect is heterogeneous in terms of region and mode of enterprise trade; in the eastern region and processing trade enterprises the IPP effect is more pronounced.