Intellectual Property Rights, Foreign Direct Investment, and Industrial Development

41 Pages Posted: 5 Oct 2009 Last revised: 25 Jul 2021

See all articles by Lee Branstetter

Lee Branstetter

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management; National Bureau of Economic Research (NBER)

Kamal Saggi

Southern Methodist University (SMU) - Department of Economics

Date Written: October 2009

Abstract

This paper develops a North-South product model in which Southern imitation and the North-South flow of foreign direct investment (FDI) are endogenously determined. In the model, a strengthening of IPR protection in the South reduces the rate of imitation, which, in turn, increases the flow of FDI. The increase in FDI more than offsets the decline in production undertaken by Southern imitators, so that the South's share of goods produced by the global economy increases. Furthermore, real wages of Southern workers increase even though prices of goods produced by multinationals exceed those of Southern imitators. The preceding results hold when Northern innovation is endogenously determined; in addition, the rate of innovation increases with a strengthening of Southern IPR protection.

Suggested Citation

Branstetter, Lee and Saggi, Kamal, Intellectual Property Rights, Foreign Direct Investment, and Industrial Development (October 2009). NBER Working Paper No. w15393, Available at SSRN: https://ssrn.com/abstract=1482111

Lee Branstetter (Contact Author)

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

Pittsburgh, PA 15213-3890
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Kamal Saggi

Southern Methodist University (SMU) - Department of Economics ( email )

Dallas, TX 75275
United States
214-768-3274 (Phone)
214-768-1821 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
42
Abstract Views
929
PlumX Metrics