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The role of foreign direct investment in the relation between intellectual property rights and growth

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  • Mila Kashcheeva

Abstract

The theory predicts that the welfare implications of intellectual property rights (IPR) reform are ambiguous, and depend on the extent of foreign direct investment (FDI) in the IPR-reforming country. However, previous research finds that stricter IPR increase development, especially among multinational firms in technology-intensive industries. I examine whether the impact of IPR on growth is different depending on a level of FDI, because previous research either looked at a few episodes of IPR reforms, or a specific source or a recipient of FDI, thus potentially overlooking the global effect. Using dynamic panel data techniques and a sample of 103 countries over 1970-2009, I find that although FDI and IPR have positive effects on growth for most of the countries, stronger IPR mitigates the growth effect of FDI for developing countries. Moreover, at the highest levels of FDI, lax IPR increase growth. The effect works through capital accumulation and TFP improvements. Copyright 2013 Oxford University Press 2013 All rights reserved, Oxford University Press.

Suggested Citation

  • Mila Kashcheeva, 2013. "The role of foreign direct investment in the relation between intellectual property rights and growth," Oxford Economic Papers, Oxford University Press, vol. 65(3), pages 699-720, July.
    • Handle: RePEc:oup:oxecpp:v:65:y:2013:i:3:p:699-720
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    File URL: http://hdl.handle.net/10.1093/oep/gpt015
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    Cited by:

    1. Adriana Burlea‐Schiopoiu & Simina Brostescu & Liviu Popescu, 2023. "The impact of foreign direct investment on the economic development of emerging countries of the European Union," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 2148-2177, April.
    2. Gaoju Yang & Yilu Zhang & Xiao Yu, 2020. "Intellectual property rights and the upgrading of the global value chain status," Pacific Economic Review, Wiley Blackwell, vol. 25(2), pages 185-204, May.
    3. Sasatra, Sudsawasd & Santi, Chaisrisawatsuk, 2014. "FDI inflows and outflows, intellectual property rights, and productivity growth," IDE Discussion Papers 444, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    4. Viglioni, Marco Túlio Dinali & Calegario, Cristina Lelis Leal & Aveline, Carlos Eduardo Stefaniak & Ferreira, Manuel Portugal & Borini, Felipe Mendes & Bruhn, Nádia Campos Pereira, 2023. "Effects of intellectual property rights on innovation and economic activity: A non-linear perspective from Latin America," Structural Change and Economic Dynamics, Elsevier, vol. 67(C), pages 359-371.
    5. Cook, Thomas R. & Liu, Amy H., 2016. "Using Linguistic Networks to Explain Strength of Intellectual Property Rights," World Development, Elsevier, vol. 87(C), pages 128-138.
    6. 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).
    7. Kelvin W. Willoughby, 2020. "Endogenous innovation, outward-bound international patenting and national economic development," The Journal of Technology Transfer, Springer, vol. 45(3), pages 844-869, June.
    8. Willoughby, Kelvin W. & Mullina, Nadezhda, 2021. "Reverse innovation, international patenting and economic inertia: Constraints to appropriating the benefits of technological innovation," Technology in Society, Elsevier, vol. 67(C).
    9. Palaniaandy, Ayappan & Chin, Lee, 2018. "Intellectual Property Rights, Foreign Direct Investment and Economic Growth," MPRA Paper 118780, University Library of Munich, Germany.
    10. Sasatra Sudsawasd & Santi Chaisrisawatsuk, 2014. "Foreign Direct Investment, Intellectual Property Rights, and Productivity Growth," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 5(03), pages 1-19.

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