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Distance to frontier, intellectual property rights, and economic growth

  • Haibin Wu
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    This article examines the effects of intellectual property rights (IPR) protection on growth and convergence. Firms in a country undertake both innovation and imitation to improve their productivity. IPR protection reduces the cost of innovation, but makes imitation more costly. Countries at early stages of growth adopt a strategy of high effort on imitation, and switch to the strategy of high effort on innovation at some point. A higher degree of IPR protection makes the switch to the strategy of high effort on innovation earlier. There are two possible growth traps. A middle-income trap arises when a country fails to switch to high effort on innovation due to a low degree of IPR protection. Whereas a poverty trap may exist at the early stage of development, when there is no enough effort on imitation due to a strict IPR protection.

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/10438590802551227
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    Article provided by Taylor & Francis Journals in its journal Economics of Innovation and New Technology.

    Volume (Year): 19 (2010)
    Issue (Month): 2 ()
    Pages: 165-183

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    Handle: RePEc:taf:ecinnt:v:19:y:2010:i:2:p:165-183
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