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Intellectual Property Rights and Foreign Direct Investment: A Welfare Analysis

Author

Listed:
  • Hitoshi Tanaka

    (Faculty of Economics, Hokkai-Gakuen University)

  • Tatsuro Iwaisako

    (Graduate School of Economics, Osaka University)

Abstract

This paper examines how intellectual property rights (IPR) protection affects innovation and foreign direct investment (FDI) using a North-South quality-ladder model incorporat- ing the exogenous and costless imitation of technology and subsidy policies for both R&D and FDI. We show that for the interior steady state to be stable, either R&D or FDI sub- sidy rates must be positive in the costless imitation model. Our findings also indicate that strengthening IPR protection promotes both innovation and FDI. Moreover, a strengthen- ing of IPR protection can also improve welfare if the initial IPR protection in the South is weak.

Suggested Citation

  • Hitoshi Tanaka & Tatsuro Iwaisako, 2013. "Intellectual Property Rights and Foreign Direct Investment: A Welfare Analysis," Discussion Papers in Economics and Business 13-15, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:1315
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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • 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

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