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Intellectual Property Rights and Foreign Direct Investment: A Welfare Analysis

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  • Hitoshi Tanaka

    ()
    (Faculty of Economics, Hokkai-Gakuen University)

  • Tatsuro Iwaisako

    ()
    (Graduate School of Economics, Osaka University)

Abstract

This paper examines how intellectual property rights (IPR) protection affects innovation and foreign direct investment (FDI) using a North-South quality-ladder model incorporat- ing the exogenous and costless imitation of technology and subsidy policies for both R&D and FDI. We show that for the interior steady state to be stable, either R&D or FDI sub- sidy rates must be positive in the costless imitation model. Our findings also indicate that strengthening IPR protection promotes both innovation and FDI. Moreover, a strengthen- ing of IPR protection can also improve welfare if the initial IPR protection in the South is weak.

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Bibliographic Info

Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 13-15.

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Length: 62 pages
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:osk:wpaper:1315

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Web page: http://www.econ.osaka-u.ac.jp/
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Keywords: foreign direct investment; innovation; intellectual property rights protection;

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References

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Cited by:
  1. Chu, Angus C. & Cozzi, Guido & Furukawa, Yuichi, 2013. "A Schumpeterian Analysis of Monetary Policy, Innovation and North-South Technology Transfer," Economics Working Paper Series 1319, University of St. Gallen, School of Economics and Political Science.
  2. Iwaisako, Tatsuro, 2013. "Welfare effects of patent protection and productive public services: Why do developing countries prefer weaker patent protection?," Economics Letters, Elsevier, vol. 118(3), pages 478-481.

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