Faculty Details

Photo of Lee  Branstetter

Lee Branstetter

Associate Professor of Economics and Public Policy (joint appointment with the Social and Decision Sciences department)

Full-time Faculty

Voice: 412.268.4649
Email: branstet@andrew.cmu.edu
View curriculum vitae (.pdf)


Lee Branstetter joined the Heinz School faculty in 2006 as a tenured associate professor. He has a joint appointment with the Department of Social and Decision Sciences (SDS). Branstetter is also a research associate of the National Bureau of Economic Research and serves as an associate editor of the Journal of International Economics. From 2011-2012, he served as the Senior Economist for International Trade and Investment for the President's Council of Economic Advisors. Prior to coming to Carnegie Mellon, he was the Daniel J. Stanton Associate Professor of Business and the Director of the International Business Program at Columbia Business School. Branstetter has also taught at the University of California, Davis, where he was the Director of the East Asian Studies Program, and at Dartmouth College. He has served as a consultant to the OECD Science and Technology Directorate, the Advanced Technology Program of the U.S. Department of Commerce, and the World Bank. In recent years, Branstetter has been a research fellow of the Keio University Global Security Research Institute and a visiting fellow of the Research Institute of Economy, Trade, and Industry in Japan. Branstetter holds a B.A. in Economics and Mathematical Methods in the Social Sciences (MMSS) from Northwestern University, and he earned his Ph.D. in Economics at Harvard in 1996.


At Columbia Business School, Branstetter was awarded the Chazen Innovation Prize for innovative teaching in International Business. He was later appointed to the Daniel Stanton Associate Professorship in recognition of outstanding service, teaching, and scholarship. Branstetter was awarded an Abe Fellowship by the Social Science Research Council in 2001. At UC-Davis, Branstetter received the Thomas Mayer Distinguished Teaching Award from the Department of Economics. As a graduate student at Harvard, Branstetter received fellowships from the National Science Foundation, the Japan Foundation, the Sumner Slichter Fund, and the Reischauer Institute of Japanese Studies.


Branstetter’s research interests include the economics of technological innovation, international economics, industrial organization, and economic growth in East Asia, with a particular focus on China and Japan. His papers span a wide range of topics, including the effects of patent laws on international technology transfer, the role of multinationals in the diffusion of technology across national boundaries, the impact of research consortia on the research productivity of participating firms, and the evolution of trade and investment policies in the People’s Republic of China. His work has appeared in leading journals including the American Economic Review, the Quarterly Journal of Economics, the RAND Journal of Economics, and the Journal of International Economics.

Selected Publications








  • "Going Soft: How the Rise of Software-Based Innovation Led to the Decline of Japan's IT Industry and the Resurgence of Silicon Valley," with Ashish Arora (Duke) and Matej Drev (CMU). Forthcoming in the Review of Economics and Statistics.
  • "Intellectual Property Rights, Foreign Direct Investment, and Industrial Development," with Kamal Saggi (Vanderbilt). Economic Journal, vol. 121, no. 555, September 2011, pp. 1161-1191.
  • "Does Intellectual Property Rights Reform Spur Industrial Development?" with Raymond Fisman (Columbia), Fritz Foley (HBS), and Kamal Saggi (Vanderbilt). Journal of International Economics, vol. 83, Spring 2011, pp 27-36.
  • “China’s Embrace of Globalization,” with Nicholas Lardy (Institute for International Economics), in Loren Brandt and Thomas Rawski, (eds.), China’s Economic Transition: Origins, Mechanisms, and Consequences, 2008, Cambridge University Press.
  • “Do Stronger Intellectual Property Rights Increase International Technology Transfer? Empirical Evidence from U.S. Firm-Level Data,” with Raymond Fisman (Columbia) and Fritz Foley (HBS). Quarterly Journal of Economics, vol. 121, no. 1, pp. 321-349.
  • “When Do Research Consortia Work Well and Why? Evidence from Japanese Panel Data,” with Mariko Sakakibara (UCLA), American Economic Review, vol. 92, no. 1, March 2002, pp. 143-159.
  • “Do Stronger Patents Induce More Innovation? Evidence from the 1988 Japanese Patent Law Reforms,” with Mariko Sakakibara (UCLA), RAND Journal of Economics, vol. 32, no. 1, Spring 2001, pp. 77-100. Reprinted in R. Towse and R. Holzhauer, (eds.), The Economics of Intellectual Property, Edward Elgar Publishing Limited, 2001. Reprinted in K. Maskus, (ed.), The WTO, Intellectual Property, and the Knowledge Economy, a forthcoming volume in the series Critical Perspectives on the Global Trading System and the WTO, Edward Elgar Press.
  • “Is Foreign Direct Investment a Channel of Knowledge Spillovers: Evidence from Japan’s FDI in the United States,” Journal of International Economics, vol. 68, February 2006, pp. 325-344.
  • “Trade and Foreign Direct Investment in China: A Political Economy Approach,” with Robert Feenstra (UC-Davis), Journal of International Economics, vol. 58, no. 2, December 2002, pp. 335-358.
  • “Are Knowledge Spillovers International or Intranational in Scope? Microeconometric Evidence from Japan and the United States,”Journal of International Economics, vol. 53, February 2001, pp. 53-79.
  • “Japanese Research Consortia: A Microeconometric Analysis of Industrial Policy,” with Mariko Sakakibara (UCLA), Journal of Industrial Economics, vol. 46, no. 2, June 1998, pp. 207-233.
  • “Measuring the Impact of U.S. Research Consortia,” with Mariko Sakakibara (UCLA), Managerial and Decision Economics, vol. 24, Spring 2003, pp. 51-69.
  • “Looking for International Knowledge Spillovers: A Review of the Literature with Suggestions for New Approaches,” Annales d’Economie et de Statistique No. 49/50, 1998, pp. 517-540. Reprinted in D. Encaoua et. al., (eds.), The Economics and Econometrics of Innovation, Kluwer Academic Publishers, 2000.
  •  “Do Stronger Patents Induce More Local Innovation?” Journal of International Economic Law, vol. 7, no. 2, 2004, pp. 359-370. Reprinted in Keith Maskus and Jerome Reichman, eds., International Public Goods and Transfer of Technology Under a Globalized Intellectual Property Regime, Cambridge University Press, 2005.












    Ph.D., Economics, Harvard University

    Working Papers

    The Globalization of R&D: China, India, and the Rise of International Co-invention

    Abstract: The rapid rise of China and India as innovating nations seems to contradict conventional views of the economic growth and development process. In standard models, the acquisition of innovative capacity in frontier technologies emerges as one of the final stages in a long development process. China and India are still poor, yet advanced nations are granting rapidly growing numbers of patents to inventors based in these countries. Our analysis of these patents shows that a majority of them are granted to local inventor teams working for foreign multinationals. An important fraction of these patents also incorporate direct intellectual inputs from researchers outside China or India, a trend that we characterize as "international co-invention." As such, the international patenting surge of China and India does not represent a challenge to traditional models of growth and development, so much as it represents a move toward an expanded international division of labor within global R&D networks.


    Intellectual Property Rights, Foreign Direct Investment, and Industrial Development

    This paper develops a North-South product model in which Southern imitation and the North-South flow of foreign direct investment (FDI) are endogenously determined. In the model, a strengthening of IPR protection in the South reduces the rate of imitation, which, in turn, increases the flow of FDI. The increase in FDI more than offsets the decline in production undertaken by Southern imitators, so that the South’s share of goods produced by the global economy increases. Furthermore, real wages of Southern workers increase even though prices of goods produced by multinationals exceed those of Southern imitators. The preceding results hold when Northern innovation is endogenously determined; in addition, the rate of innovation increases with a strengthening of Southern IPR protection.


    Facts and Fallacies About U.S. FDI in China

    Despite the rapid expansion of U.S.-China trade ties, the increase in U.S. FDI in China, and the expanding amount of economic research exploring these developments, a number of misconceptions distort the popular understanding of U.S. multinationals in China.  In this paper, we seek to correct four common misunderstandings by providing a statistical portrait of several aspects of U.S. affiliate activity in the country and placing this activity in its appropriate economic context.


    Intellectual Property Rights, Imitation, and Foreign Direct Investment: Theory and Evidence

    This paper theoretically and empirically analyzes the effect of strengthening intellectual property rights in developing countries on the level and composition of industrial development.  We develop a North-South product cycle model in which Northern innovation, Southern imitation, and FDI are all endogenous.Our model predicts that IPR reform in the South leads to increased FDI in the North, as Northern firms shift production to Southern affiliates.  This FDI accelerates Southern industrial development. The South's share of global manufacturing and the pace at which production of recently invented goods shifts to the South both increase.  Additionally, the model also predicts that as production shifts to the South, Northern resources will be reallocated to R&D, driving an increase in the global rate of innovation.  We test the model's predictions by analyzing responses of U.S.-based multinationals and domestic industrial production to IPR reforms in the 1980s and 1990s.  First, we find that MNCs expand the scale of their activities in reforming countries after IPR reform.  MNCs that make extensive use of intellectual property disproportionately increase their use of inputs.  There is an overall expansion of industrial activity after IPR reform, and highly disaggregated trade data indicate an increase in the number of initial export episodes in response to reform.  These results suggest that the expansion of multinational activity more than offsets any decline in the imitative activity of indigenous firms.


    China's Embrace of Globalization

    As China has become an increasingly important part of the global trading system over the past two decades, interest in the country and its international economic policies has increased among international economists who are not China specialists. This paper represents an attempt to provide the international economics community with a succinct summary of the major steps in the evolution of Chinese policy toward international trade and foreign direct investment and their consequences since the late 1970s. In doing so, we draw upon and update a number of more comprehensive book-length treatments of the subject. It is our hope that this paper will prove to be a useful resource for the growing numbers of international economists who are exploring China-related issues, either in the classroom or in their own research.


    Is Academic Science Driving a Surge in Industrial Innovation? Evidence From Patent Citations

    What is driving the remarkable increase over the last decade in the propensity of patents to cite academic science? Does this trend indicate that stronger knowledge spillovers from academia have helped power the surge in innovative activity in the U.S. in the 1990s? This paper seeks to shed light on these questions by using a common empirical framework to assess the relative importance of various alternative hypotheses in explaining the growth in patent citations to science. Our analysis supports the notion that the nature of U.S. inventive activity has changed over the sample period, with an increased emphasis on the use of the knowledge generated by university-based scientists in later years. However, the concentration of patent-to-paper citation activity within what we call the "bio nexus" suggests that much of the contribution of knowledge spillovers from academia may belargely confined to bioscience-related inventions.