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Imitation and Innovation Driven Development under Imperfect Intellectual Property Rights

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  • Christian Lorenczik
  • Monique Newiak

Abstract

One of the main channels through which intellectual property rights (IPRs) influence a country's economy is through their impact on innovation. However, North-South models usually constrain the South to imitative activity which generates a detrimental effect of stronger IPRs on southern welfare by construction. Further, this assumption does not account for the increasing R&D efforts in developing countries in the last decades. To study the effects of IPR protection conditional on a country's development, we present a North-South variety model which allows for original southern R&D activity and imitation specifically targeted to southern innovations. We find that the effects of IPRs depend crucially on the stage of development of a country in terms of R&D activity. In particular, we show that strengthening IPRs promotes southern R&D, increases southern real consumption and decreases the wage gap between North and South if IPRs pass a threshold level. Below this threshold, an increase in IPRs may fail to promote R&D while decreasing real consumption and wages in the South.

Suggested Citation

  • Christian Lorenczik & Monique Newiak, 2010. "Imitation and Innovation Driven Development under Imperfect Intellectual Property Rights," DEGIT Conference Papers c015_056, DEGIT, Dynamics, Economic Growth, and International Trade.
  • Handle: RePEc:deg:conpap:c015_056
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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. Pierre‐Richard Agénor & Barış Alpaslan, 2018. "Infrastructure And Industrial Development With Endogenous Skill Acquisition," Bulletin of Economic Research, Wiley Blackwell, vol. 70(4), pages 313-334, October.
    3. Thomas Brenner, 2014. "Science, Innovation and National Growth," Working Papers on Innovation and Space 2014-03, Philipps University Marburg, Department of Geography.
    4. 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.
    5. Caner Demir & Aykut Lenger, 2019. "Intellectual property rights and global imitation chains: the north–south–east model," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(2), pages 549-569, July.
    6. Agénor, Pierre-Richard & Canuto, Otaviano, 2015. "Middle-income growth traps," Research in Economics, Elsevier, vol. 69(4), pages 641-660.
    7. 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).
    8. 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.
    9. Hong Hwang & Jollene Z. Wu & Eden S. H. Yu, 2016. "Innovation, Imitation and Intellectual Property Rights in Developing Countries," Review of Development Economics, Wiley Blackwell, vol. 20(1), pages 138-151, February.
    10. Zheng, Zhijie & Huang, Chien-Yu & Yang, Yibai, 2020. "Patent protection, innovation, and technology transfer in a Schumpeterian economy," European Economic Review, Elsevier, vol. 129(C).
    11. 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.
    12. 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.
    13. Fu, Tong & Jian, Ze, 2018. "Property rights protection, financial access and corporate R&D: Evidence from a large representative sample of Chinese firms," Economic Systems, Elsevier, vol. 42(2), pages 332-345.
    14. Hamid Mohtadi & Stefan Ruediger, 2014. "Intellectual Property Rights and Growth: Is there a Threshold Effect?," International Economic Journal, Taylor & Francis Journals, vol. 28(1), pages 121-135, March.
    15. 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.

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    More about this item

    Keywords

    Innovation; Imitation; Economic Growth; Intellectual Property Rights;
    All these keywords.

    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
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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