Patent Protection, Financial Development and Economic Growth
AbstractThis paper theoretically and empirically investigates the effects of patent protection on innovation and economic growth by looking at the interaction between patent system and financial system. On the one hand, patent protection accelerates economic growth through enhancing the value of innovation. On the other hand, it lowers the demand for capital by increasing the price, thereby weakening the learning-by-doing effect and raising the cost of production. It follows, in turn, patent protection stifles innovation. As a consequence, a non-monotonic relationship between patents and economic growth could be seen. In addition, the degree of patent protection that maximizes the growth rate is decreasing with the degree of financial development, when the interaction between patent system and financial system is considered. Our cross-section and panel regressions support our theoretical results.
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Bibliographic InfoPaper provided by China Economics and Management Academy, Central University of Finance and Economics in its series CEMA Working Papers with number 589.
Length: 40 pages
Date of creation: 2011
Date of revision:
Patent Protection; Financial development; Innovation; Economic Growth;
Find related papers by JEL classification:
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- O34 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Intellectual Property Rights
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