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Intellectual property rights, southern innovation and foreign direct investment

Author

Listed:
  • Anuj J. Mathew

    (School of Economics and Business Administration, University of Navarra)

  • Arijit Mukherjee

    (School of Economics, University of Nottingham)

Abstract

While empirical evidence shows considerable innovative activities by the Southern firms, these activities have been ignored in determining the relationship between Southern patent regime and foreign direct investment (FDI) by the Northern firms. We show that whether a stronger Southern patent regime increases a Northern firm's incentive for FDI depends on the innovative capability of the Southern firm, the degree of product differentiation and transportation cost. If either the cost of Southern innovation is sufficiently low such that the Southern firm innovates irrespective of the Southern patent regime and the production strategy of the Northern firm, or the Southern firm's cost of innovation is moderate such that it innovates only under a stronger Southern patent regime, a stronger Southern patent regime may reduce the Northern firm's incentive for FDI. For all other costs of Southern innovation, a stronger Southern patent regime increases the Northern firm's incentive for FDI.

Suggested Citation

  • Anuj J. Mathew & Arijit Mukherjee, 2009. "Intellectual property rights, southern innovation and foreign direct investment," Faculty Working Papers 15/09, School of Economics and Business Administration, University of Navarra.
    • Handle: RePEc:una:unccee:wp1509
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    Cited by:

    1. Hwang, Hong & Peng, Cheng-Hau & Shih, Pei-Cyuan, 2014. "Parallel imports, product innovation and market structures," International Review of Economics & Finance, Elsevier, vol. 34(C), pages 237-245.
    2. Bhan, Aditya & Kabiraj, Tarun, 2014. "Incentives for product and process innovations: a case for the drug industry," MPRA Paper 61030, University Library of Munich, Germany.
    3. Salim, Ali & Razavi, Mohammad Reza & Afshari-Mofrad, Masoud, 2017. "Foreign direct investment and technology spillover in Iran: The role of technological capabilities of subsidiaries," Technological Forecasting and Social Change, Elsevier, vol. 122(C), pages 207-214.
    4. Chaudhuri, Sarbajit, 2014. "Foreign capital, non-traded goods and welfare in a developing economy in the presence of externalities," International Review of Economics & Finance, Elsevier, vol. 31(C), pages 249-262.
    5. Julien Berthoumieu, 2015. "Policy Instruments, Patents and International Technology Diffusion in a North-South Duopoly," Working Papers hal-01155111, HAL.
    6. Mumtaz Hussain Shah, 2017. "Inward FDI in East Asian & Pacific Developing Countries due to WTO Led Liberalisation," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 9(2), pages 1-20, June.
    7. Arun, Korhan & Yıldırım, Durmuş Çağrı, 2017. "Effects of Foreign Direct Investment on Intellectual Property, Patents and R&D," MPRA Paper 80470, University Library of Munich, Germany.
    8. Kuang-Cheng Andy Wang & Yi-Jie Wang & Wen-Jung Liang, 2016. "Intellectual property rights, international licensing and foreign direct investment," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 23(3), pages 291-305, July.
    9. Marjit, Sugata & Yang, Lei, 2015. "Does intellectual property right promote innovations when pirates are innovators?," International Review of Economics & Finance, Elsevier, vol. 37(C), pages 203-207.
    10. Li, Fengchun & Liang, Ting & Zhou, Xiang, 2021. "How does intellectual property protection in the host country affect outward foreign direct investment?," Research in International Business and Finance, Elsevier, vol. 58(C).

    More about this item

    Keywords

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    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • 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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