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Effects of TRIPS on Growth, Welfare and Income Inequality in an R&D-Growth Model

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  • Chu, Angus C.
  • Peng, Shin-Kun

Abstract

What are the effects of the WTO's TRIPS Agreement on growth, welfare and income inequality? To analyze this question, we develop an open-economy R&D-driven endogenous-growth model with wealth heterogeneity. Under TRIPS, the North experiences higher growth and welfare at the expense of higher income inequality. As for the South, it experiences higher growth at the expense of lower welfare and higher income inequality. Also, there exists a critical degree for the domestic importance of foreign goods below which global welfare decreases under TRIPS. In light of our findings, we discuss policy implications on China’s accession to the WTO in 2001.

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  • Chu, Angus C. & Peng, Shin-Kun, 2008. "Effects of TRIPS on Growth, Welfare and Income Inequality in an R&D-Growth Model," MPRA Paper 10956, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:10956
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    Cited by:

    1. Chen, Hung-Ju, 2019. "Innovation and FDI: Does the Target of Intellectual Property Rights Matter?," MPRA Paper 94692, University Library of Munich, Germany.
    2. Neves, Pedro Cunha & Afonso, Oscar & Silva, Diana & Sochirca, Elena, 2021. "The link between intellectual property rights, innovation, and growth: A meta-analysis," Economic Modelling, Elsevier, vol. 97(C), pages 196-209.
    3. Christian Kiedaisch, 2021. "Growth and welfare effects of intellectual property rights when consumers differ in income," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 72(4), pages 1121-1170, November.
    4. 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).
    5. Eric W. Bond & Ben Zissimos, 2017. "Patent Breadth In An International Setting," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1538-1555, July.
    6. Petar Stankov, 2017. "Economic Freedom and Welfare Before and After the Crisis," Springer Books, Springer, number 978-3-319-62497-6, January.
    7. Chu, Angus C. & Leung, Charles K.Y. & Tang, Edward, 2012. "Intellectual property rights, technical progress and the volatility of economic growth," Journal of Macroeconomics, Elsevier, vol. 34(3), pages 749-756.
    8. Angus C. Chu, 2009. "Macroeconomic Effects of Intellectual Property Rights: A Survey," IEAS Working Paper : academic research 09-A007, Institute of Economics, Academia Sinica, Taipei, Taiwan.
    9. Zhang, Jingjing & Leoncini, Riccardo & Tsai, Yingyi, 2018. "Intellectual property rights protection, labour mobility and wage inequality," Economic Modelling, Elsevier, vol. 70(C), pages 239-244.
    10. Yu, Po-yang & Lai, Ching-chong, 2020. "Optimal Privatization and Economic Growth in a Schumpeterian Economy," Journal of Macroeconomics, Elsevier, vol. 64(C).
    11. Chen, Hung-Ju, 2021. "Innovation and FDI: Does the target of intellectual property rights protection matter?," Journal of International Money and Finance, Elsevier, vol. 118(C).
    12. Sefa Awaworyi Churchill & Hoang M. Luong & Mehmet Ugur, 2022. "Does intellectual property protection deliver economic benefits? A multi‐outcome meta‐regression analysis of the evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 36(5), pages 1477-1509, December.
    13. Sorek, Gilad, 2011. "Patents and quality growth in OLG economy," Journal of Macroeconomics, Elsevier, vol. 33(4), pages 690-699.
    14. Chu, Angus, 2021. "Macroeconomic Effects of Intellectual Property Rights: An Updated Survey," MPRA Paper 110839, University Library of Munich, Germany.
    15. Yuki Saito, 2018. "On the trade, growth, and welfare effects of intellectual property rights protection," Southern Economic Journal, John Wiley & Sons, vol. 85(1), pages 235-254, July.

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    More about this item

    Keywords

    endogenous growth; heterogeneity; income inequality; patent policy; TRIPS;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • 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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