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Patent protection, capital accumulation, and economic growth

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  • Tatsuro Iwaisako

    ()

  • Koichi Futagami

Abstract

In this paper, we investigate how strengthening patent protection affects economic growth in an endogenous growth model where both innovation and capital accumulation are the driving forces of economic growth. In this model, stronger patent protection raises the profit flow obtained by innovation but reduces the factor demand for capital. This process accelerates innovation but discourages capital accumulation, and because of the negative effect on economic growth through reducing capital accumulation, strengthening patent protection may then impede economic growth. This result contrasts with earlier studies where innovation is the sole driving force for economic growth. Moreover, in an open economy model where technologies are transferred and capital is imported from abroad, the strictest protection of patents enhances technology adoption from abroad but impedes capital accumulation, and thus, the relation derived between patent protection and output can be nonmonotone. In terms of implications, these findings may be able to partly explain the complex relation found by some empirical studies in this area. Copyright Springer-Verlag 2013

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Bibliographic Info

Article provided by Springer in its journal Economic Theory.

Volume (Year): 52 (2013)
Issue (Month): 2 (March)
Pages: 631-668

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Handle: RePEc:spr:joecth:v:52:y:2013:i:2:p:631-668

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Related research

Keywords: Patent policy; Endogenous growth; Innovation; Capital accumulation; O31; O34; O41;

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References

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Citations

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Cited by:
  1. Chu, Angus C. & Furukawa, Yuichi, 2012. "Patents versus R&D subsidies in a Schumpeterian growth model with endogenous market structure," MPRA Paper 41083, University Library of Munich, Germany, revised Sep 2012.
  2. Tatsuro Iwaisako, 2012. "Welfare effects of patent protection and productive public services: why do developing countries prefer weaker patent protection?," Discussion Papers in Economics and Business 12-19, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  3. Chu, Angus C. & Leung, Charles Ka Yui & TANG, C. H. Edward, 2012. "Intellectual property rights, technical progress and the volatility of economic growth," MPRA Paper 38132, University Library of Munich, Germany.
  4. Chu, Angus C. & Cozzi, Guido & Galli, Silvia, 2011. "Innovating like China: a theory of stage-dependent intellectual property rights," MPRA Paper 30553, University Library of Munich, Germany.
  5. Angus C.Chu & Yuichi Furukawa & Lei Ji, 2013. "Patents RD subsidies and endogenous market structure in a Schumpeterian economy," Documents de Travail de l'OFCE 2013-19, Observatoire Francais des Conjonctures Economiques (OFCE).
  6. Angus Chu & Guido Cozzi & Yuichi Furukawa, . "Effects of Economic Development in China on Skill-Biased Technical Change in the US," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
  7. repec:pra:mprapa:52608 is not listed on IDEAS
  8. Furukawa, Yuichi, 2013. "The Struggle to Survive in the R&D Sector: Implications for Innovation and Growth," MPRA Paper 47728, University Library of Munich, Germany.
  9. Chu, Angus C. & Cozzi, Guido & Lai, Ching-Chong & Liao, Chih-Hsing, 2013. "Monetary Policy, R&D and Economic Growth in an Open Economy," MPRA Paper 47364, University Library of Munich, Germany.
  10. Chu, Angus C. & Cozzi, Guido & Galli, Silvia, 2014. "Stage-dependent intellectual property rights," Journal of Development Economics, Elsevier, vol. 106(C), pages 239-249.
  11. Davis, Lewis S. & Şener, Fuat, 2012. "Private patent protection in the theory of Schumpeterian growth," European Economic Review, Elsevier, vol. 56(7), pages 1446-1460.
  12. Keiichi Kishi, 2014. "A patentability requirement and industries targeted by R&D," Discussion Papers in Economics and Business 14-27, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  13. Chu, Angus C. & Cozzi, Guido & Galli, Silvia, 2013. "Theory and Empirics of Stage-Dependent Intellectual Property Rights," Economics Working Paper Series 1306, University of St. Gallen, School of Economics and Political Science.
  14. Chu, Angus C. & Cozzi, Guido & Furukawa, Yuichi, 2012. "From China with love: Effects of the Chinese economy on skill-biased technical change in the US," MPRA Paper 40555, University Library of Munich, Germany.

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