Firm Heterogeneity and Weak Intellectual Property Rights

42 Pages Posted: 23 Aug 2007

See all articles by Stanley Watt

Stanley Watt

International Monetary Fund (IMF)

Date Written: July 2007


In weak intellectual property rights (IPR) environments, the imitation of proprietary technology by domestic firms has become a deterrent for foreign investment. Different multinationals may view this deterrent differently. This paper develops a model where firms with more technology are less likely to invest in weak IPR environments. If imitation is costly, the model predicts that multinationals with the lowest level and highest level of technology will invest in weak IPR environments, and multinationals with a moderate level of technology will invest only in strong IPR environments. Empirical analysis with firm level data is consistent with this non-monotonicity result.

Keywords: Working Paper, Corporate sector, Foreign direct investment, Technology transfer, Economic models

Suggested Citation

Watt, Stanley, Firm Heterogeneity and Weak Intellectual Property Rights (July 2007). IMF Working Paper No. 07/161, Available at SSRN:

Stanley Watt (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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