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The role of IPRs on prices, wages and growth in a two country directed technical change model

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  • Afonso Óscar

    (University of Porto, Faculty of Economics, CEFAGE-UBI, and OBEGEF, Rua Dr. Roberto Frias, 4200–464 Porto, Portugal)

Abstract

We develop a two country, Innovator and Follower, directed technical change model between tradable and nontradable sectors. The Innovator performs innovative R&D. The Follower imitates, in a pre-trade context, and adopts, in a trade scenario, the available technological knowledge. We start by considering the pre-trade context and then we analyze the trade scenario. In both regimes – imitation and adoption – and in BGP, international IPRs protection, R&D productivity, scale-effects intensity and substitutability between sectors determine the stable and unique worldwide economic growth rate and the technological-knowledge bias, which, in turn, affects relative prices and wages. Depending on IPRs protection, imitation and adoption can either amplify or slow down the technological-knowledge bias and thus the real exchange rate, the wage inequality and the worldwide growth rate. For example, under technological-knowledge adoption with positive international IPRs protection and substitutability, wages tend to be higher in the Innovator, technological knowledge and intra-country wage inequality are biased towards the tradable sector, and the real exchange rate accommodates the Balassa-Samuelson proposal.

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  • Afonso Óscar, 2019. "The role of IPRs on prices, wages and growth in a two country directed technical change model," The B.E. Journal of Macroeconomics, De Gruyter, vol. 19(1), pages 1-27, January.
    • Handle: RePEc:bpj:bejmac:v:19:y:2019:i:1:p:27:n:4
    DOI: 10.1515/bejm-2017-0070
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    More about this item

    Keywords

    directed technological change; international trade; intellectual property rights; scale effects; prices; wages; economic growth;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • F10 - International Economics - - Trade - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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