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Imitation and innovation driven development under imperfect intellectual property rights


  • Lorenczik, Christian
  • Newiak, Monique


Developing countries employ about two-fifth of the world's researchers, originate one quarter of world expenditures on R&D, and their inventions are subject to imitation. Nevertheless, the previous literature focuses on North–South setups in which the South is restricted to imitating northern inventions. To analyze the effects of IPR policies on developed and developing countries, we extend this literature to allow not only for southern innovation and imitation of northern goods, but also for imitation targeted at southern innovations. We find the effects of IPRs on R&D and welfare to be non-monotonic and dependent on innovation efficiency and an innovation threshold in the South. For sufficiently strong IPRs the South engages in original R&D and stronger IPRs promote southern innovation, welfare, and a reduction in the North–South wage gap. Below the threshold, a strengthening of IPR protection fails to promote innovation and decreases welfare. Stronger IPRs exclusively for southern firms can benefit both regions by shifting southern resources from the imitation of northern goods to original southern innovation.

Suggested Citation

  • Lorenczik, Christian & Newiak, Monique, 2012. "Imitation and innovation driven development under imperfect intellectual property rights," European Economic Review, Elsevier, vol. 56(7), pages 1361-1375.
  • Handle: RePEc:eee:eecrev:v:56:y:2012:i:7:p:1361-1375 DOI: 10.1016/j.euroecorev.2012.07.003

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    References listed on IDEAS

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    Cited by:

    1. Iwaisako, Tatsuro & Tanaka, Hitoshi, 2017. "Product cycles and growth cycles," Journal of International Economics, Elsevier, vol. 105(C), pages 22-40.
    2. Agénor, Pierre-Richard & Canuto, Otaviano, 2015. "Middle-income growth traps," Research in Economics, Elsevier, vol. 69(4), pages 641-660.
    3. Theo S. Eicher & Monique Newiak, 2013. "Intellectual property rights as development determinants," Canadian Journal of Economics, Canadian Economics Association, vol. 46(1), pages 4-22, February.
    4. 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.
    5. Brenner, Thomas, 2015. "Science, Innovation and National Growth," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112873, Verein für Socialpolitik / German Economic Association.
    6. Antonio Della Malva & Enrico Santarelli, 2016. "Intellectual property rights, distance to the frontier, and R&D: evidence from microdata," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 6(1), pages 1-24, April.
    7. Pierre-Richard Agénor & Baris Alpaslan, 2014. "Infrastructure and Industrial Development with Endogenous Skill Acquisition," Centre for Growth and Business Cycle Research Discussion Paper Series 195, Economics, The Univeristy of Manchester.
    8. Thomas Brenner, 2014. "Science, Innovation and National Growth," Working Papers on Innovation and Space 2014-03, Philipps University Marburg, Department of Geography.
    9. 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.

    More about this item


    Innovation; Imitation; Economic growth; Intellectual property rights;

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements


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