Product life-cycle, knowledge capital, and comparative advantage

This paper empirically investigates the effect of product life-cycle on trade patterns. We measure the product life-cycle length with patent citation data at the industry level. Using bilateral trade data from 2002 to 2006, we find that countries with more knowledge capital endowment export more in industries with shorter product life-cycles. We show that this pattern is largely driven by the risk of imitation. The pattern is reversed when imitation is limited by stronger intellectual property rights.