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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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    1. Calmfors, Lars & Horn, Henrik, 1985. " Classical Unemployment, Accommodation Policies and Adjustment of Real Wages," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 234-261.
    2. Pencavel, John, 1985. " Wages and Employment under Trade Unionism: Microeconomic Models and Macroeconomic Applications," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 197-225.
    3. Oswald, Andrew J., 1982. "Uncertainty and the trade union," Economics Letters, Elsevier, vol. 9(1), pages 105-111.
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    Cited by:

    1. 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.

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