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Intellectual property rights, technical progress and the volatility of economic growth

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  • Chu, Angus C.
  • Leung, Charles K.Y.
  • Tang, Edward

Abstract

In this note, we analyze the effects of intellectual property rights on the volatility of economic growth. Our analysis is motivated by the observation that the strengthening of patent protection and the increase in R&D in the US coincide with a reduction in growth volatility beginning in the mid 1980s. To analyze this phenomenon, we develop an R&D-based growth model with aggregate uncertainty in the innovation process and apply the model to ask whether increasing patent strength and R&D can lead to a significant reduction in growth volatility. We find a small but non-negligible effect that explains no less than 10% of the observed reduction in growth volatility in the US.

Suggested Citation

  • Chu, Angus C. & Leung, Charles K.Y. & Tang, Edward, 2012. "Intellectual property rights, technical progress and the volatility of economic growth," Journal of Macroeconomics, Elsevier, vol. 34(3), pages 749-756.
  • Handle: RePEc:eee:jmacro:v:34:y:2012:i:3:p:749-756
    DOI: 10.1016/j.jmacro.2012.04.002
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    2. Trabelsi Ramzi & Akri Ben Salah, 2018. "The Determinants of Innovation Capacity in the Less Innovative Countries in the Euro-Mediterranean Region," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(2), pages 526-543, June.
    3. Ibrahim Alnafrah & Sulaiman Mouselli, 2020. "Constructing the Reconstruction Process: a Smooth Transition Towards Knowledge Society and Economy in Post-Conflict Syria," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 11(3), pages 931-948, September.
    4. Azevedo, Mónica L. & Afonso, Óscar & Silva, Sandra T., 2014. "Endogenous growth and intellectual property rights: A north–south modeling proposal," Economic Modelling, Elsevier, vol. 38(C), pages 112-120.
    5. Nemlioglu, Ilayda & Mallick, Sushanta, 2020. "Does multilateral lending aid capital accumulation? Role of intellectual capital and institutional quality," Journal of International Money and Finance, Elsevier, vol. 108(C).
    6. Mohammadreza Agharebparast & Ahmad Zeinali, 2017. "The Role of Foreign Policy and International Relations in Economic Development Based on the Philosophy of Liberalism," Journal of Social Science Studies, Macrothink Institute, vol. 4(1), pages 1-9, January.
    7. Petar Stankov, 2017. "Economic Freedom and Welfare Before and After the Crisis," Springer Books, Springer, number 978-3-319-62497-6, April.
    8. Yu, Po-yang & Lai, Ching-chong, 2020. "Optimal Privatization and Economic Growth in a Schumpeterian Economy," Journal of Macroeconomics, Elsevier, vol. 64(C).
    9. E. Richard Gold & Jean‐Frédéric Morin & Erica Shadeed, 2019. "Does intellectual property lead to economic growth? Insights from a novel IP dataset," Regulation & Governance, John Wiley & Sons, vol. 13(1), pages 107-124, March.
    10. Sam Hak Kan Tang, 2018. "Does Scientific And Technical Research Reduce Macroeconomic Volatility?," Bulletin of Economic Research, Wiley Blackwell, vol. 70(1), pages 68-88, January.
    11. Ndubuisi, Gideon & Foster-McGregor, Neil, 2018. "Domestic intellectual property rights protection and the margins of bilateral exports," MERIT Working Papers 2018-035, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    More about this item

    Keywords

    Economic growth; Intellectual property rights; Growth volatility;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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