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Imitation and Innovation Driven Development under Imperfect Intellectual Property Rights

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  • Christian Lorenczik
  • Monique Newiak

Abstract

One of the main channels through which intellectual property rights (IPRs) influence a country's economy is through their impact on innovation. However, North-South models usually constrain the South to imitative activity which generates a detrimental effect of stronger IPRs on southern welfare by construction. Further, this assumption does not account for the increasing R&D efforts in developing countries in the last decades. To study the effects of IPR protection conditional on a country's development, we present a North-South variety model which allows for original southern R&D activity and imitation specifically targeted to southern innovations. We find that the effects of IPRs depend crucially on the stage of development of a country in terms of R&D activity. In particular, we show that strengthening IPRs promotes southern R&D, increases southern real consumption and decreases the wage gap between North and South if IPRs pass a threshold level. Below this threshold, an increase in IPRs may fail to promote R&D while decreasing real consumption and wages in the South.

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Bibliographic Info

Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c015_056.

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Length: 34 pages
Date of creation: Sep 2010
Date of revision:
Handle: RePEc:deg:conpap:c015_056

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Keywords: Innovation; Imitation; Economic Growth; Intellectual Property Rights;

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References

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Citations

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Cited by:
  1. Theo S Eicher & Monique Newiak, 2011. "Intellectual Property Rights as Development Determinants," Working Papers UWEC-2011-13-P, University of Washington, Department of Economics.
  2. Banerjee, Rajabrata & Roy, Saikat Sinha, 2014. "Human capital, technological progress and trade: What explains India's long run growth?," Journal of Asian Economics, Elsevier, vol. 30(C), pages 15-31.
  3. Agenor, Pierre-Richard & Dinh, Hinh T., 2013. "Public policy and industrial transformation in the process of development," Policy Research Working Paper Series 6405, The World Bank.

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