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Intellectual property rights, multinational firms and economic growth

  • Dinopoulos, Elias
  • Segerstrom, Paul

This paper develops a model of North-South trade with multinational firms and economic growth in order to analyze formally the effects of stronger intellectual property rights (IPR) protection in developing countries. In the model, Northern firms invent new higher-quality products, multinational firms transfer manufacturing operations to the South and the Southern firms imitate products produced by multinational firms. It is shown that stronger IPR protection in the South (i.e., the adoption and implementation of the TRIPs agreement) leads to a permanent increase in the rate of technology transfer to the South within multinational firms, a permanent increase in R&D employment by Southern affiliates of Northern multinationals, a permanent decrease in the North-South wage gap, and a temporary increase in the Northern innovation rate.

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Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 92 (2010)
Issue (Month): 1 (May)
Pages: 13-27

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Handle: RePEc:eee:deveco:v:92:y:2010:i:1:p:13-27
Contact details of provider: Web page: http://www.elsevier.com/locate/devec

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  1. Gene Grossman & Edwin L.-C. Lai, 2002. "International Protection of Intellectual Property," NBER Working Papers 8704, National Bureau of Economic Research, Inc.
  2. Helpman, E., 1992. "Innovation, Imitation and intellectual Property Rights," Harvard Institute of Economic Research Working Papers 1597, Harvard - Institute of Economic Research.
  3. Gino Gancia & Alessandra Bonfiglioli, 2003. "North-South Trade and Directed Technical Change," Working Papers 321, Barcelona Graduate School of Economics.
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  5. E. Dinopoulos & F. Sener, 2007. "New Directions in Schumpeterian Growth Theory," Chapters, in: Elgar Companion to Neo-Schumpeterian Economics, chapter 42 Edward Elgar.
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  10. Glass, Amy Jocelyn & Wu, Xiaodong, 2007. "Intellectual property rights and quality improvement," Journal of Development Economics, Elsevier, vol. 82(2), pages 393-415, March.
  11. Elias Dinopoulos & Peter Thompson, 1999. "Scale effects in Schumpeterian models of economic growth," Journal of Evolutionary Economics, Springer, vol. 9(2), pages 157-185.
  12. Lee Branstetter & Raymond Fisman & C. Fritz Foley & Kamal Saggi, 2007. "Intellectual Property Rights, Imitation, and Foreign Direct Investment: Theory and Evidence," NBER Working Papers 13033, National Bureau of Economic Research, Inc.
  13. Yang, Guifang & Maskus, Keith E., 2001. "Intellectual property rights, licensing, and innovation in an endogenous product-cycle model," Journal of International Economics, Elsevier, vol. 53(1), pages 169-187, February.
  14. Anthony J. Venables, 2006. "Shifts in Economic Geography and their Causes," CEP Discussion Papers dp0767, Centre for Economic Performance, LSE.
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  20. Norbäck, Pehr-Johan, 1999. "Multinational Firms, Technology and Location," Working Paper Series 512, Research Institute of Industrial Economics, revised 02 Nov 2000.
  21. Chol-Won Li, 1998. "Endogenous Growth Without Scale Effects: Comment," Working Papers 9819, Business School - Economics, University of Glasgow.
  22. Elias Dinopoulos & Constantina Kottaridi, 2008. "The Growth Effects of National Patent Policies," Review of International Economics, Wiley Blackwell, vol. 16(3), pages 499-515, 08.
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  25. Ginarte, Juan C. & Park, Walter G., 1997. "Determinants of patent rights: A cross-national study," Research Policy, Elsevier, vol. 26(3), pages 283-301, October.
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  28. Keith E. Maskus, 2000. "Intellectual Property Rights in the Global Economy," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 99, December.
  29. Charles I. Jones, 1999. "Growth: With or Without Scale Effects?," American Economic Review, American Economic Association, vol. 89(2), pages 139-144, May.
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