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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. Our findings also indicate that strengthening IPR protection promotes both innovation and FDI. Moreover, a strengthening of IPR protection can also improve welfare if the initial IPR protection in the South is weak and the R&D subsidy rate is not too high.

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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-Rev.

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Length: 61 pages
Date of creation: Jul 2013
Date of revision: Nov 2013
Handle: RePEc:osk:wpaper:1315r

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Keywords: foreign direct investment; innovation; intellectual property rights protection;

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References

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  1. Helpman, E., 1992. "Innovation, Imitation and intellectual Property Rights," Harvard Institute of Economic Research Working Papers 1597, Harvard - Institute of Economic Research.
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  8. Hitoshi Tanaka & Tatsuro Iwaisako & Koichi Futagami, 2009. "A Welfare Analysis of Global Patent Protection in a Model with Endogenous Innovation and Foreign Direct Investment," Discussion Papers in Economics and Business 09-24, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  9. Glass, Amy Jocelyn & Wu, Xiaodong, 2007. "Intellectual property rights and quality improvement," Journal of Development Economics, Elsevier, vol. 82(2), pages 393-415, March.
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Citations

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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. 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. Suzuki, Keishun, 2014. "Southern Innovation and Foreign Direct Investment," MPRA Paper 57054, University Library of Munich, Germany.

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