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Intellectual Property Rights as Development Determinants

  • Theo S Eicher
  • Monique Newiak

    (University of Washington and University of Munich)

Intellectual property rights (IPRs) have been identified as key drivers of economic performance in R&D based growth models, but their impact on development has not been fully explored in development accounting exercises. We introduce IPRs to the development accounting literature, using Two-Stage Least Squares Bayesian Model Averaging (2SBMA) to address endogeneity and model uncertainty at the instrument and income stages. We show that IPRs exert similar effects as �Rule of Law,� which has long been heralded as a core development determinant in cross country regressions. Our results thus provide robust evidence that both dimensions of property rights, physical and intellectual, are crucial prerequisites to economic development. Most importantly, we document that IPRs those that are simply written into law, but are unenforced, exert no effect on development. Instead, it is the level of enforced IPRs that causes development.

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File URL: http://faculty.washington.edu/te/papers/E_N_IPR_9-19-2011.pdf
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Paper provided by University of Washington, Department of Economics in its series Working Papers with number UWEC-2011-13-P.

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Date of creation: Sep 2011
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Publication status: Published in Canadian Journal of Economics, Volume Volume 46, No. 1 February 2013
Handle: RePEc:udb:wpaper:uwec-2011-13-p
Contact details of provider: Postal: Box 353330, Seattle, WA 98193-3330
Web page: http://www.econ.washington.edu/
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