The Impact of Intellectual Property Protection on MNEs’ Decisions to Invest in Developing Countries: Empirical Evidence from New Swiss Firm-Level FDI Panel Data

NCCR Trade Regulation Working Paper No. 2014/01

48 Pages Posted: 21 Mar 2014

See all articles by Arno Hold

Arno Hold

University of Bern - World Trade Institute, NCCR Trade Regulation

Date Written: March 19, 2014

Abstract

This article reviews the impact of intellectual property (IP) protection on foreign direct investment (FDI) by multinational enterprises (MNEs) in developing countries. Applying different panel data techniques to a newly-created comprehensive FDI/IP dataset of 31 Swiss MNEs investing into 53 developing WTO Members over a period of 21 years (1990-2010), this study seeks to examine whether the local IP protection level has a significant positive effect on MNEs’ decisions to invest in developing host countries and whether this effect differs between particular industry sectors, technological intensity levels and stages of host country development. The author could not find conclusive evidence that IP protection has an overall significant positive effect on FDI volumes. A differentiated analysis of specific sectors, however, does identify a significant positive effect for the chemical industry and for high-tech/medium-high-tech companies. Furthermore, no conclusive evidence was found that the effect of IP protection on investment decisions by MNEs differs according to the development level of the host country.

Keywords: Intellectual property, IP, investment, foreign direct investmen, FDI, investment climate, MNE, MNEs, Switzerland, developing countries, chemical industry, high-tech

JEL Classification: O1, O11, O12, O34, O31, O32, O19, D92, E22, F21, G31, O16, O39, F23, F20, C33

Suggested Citation

Hold, Arno, The Impact of Intellectual Property Protection on MNEs’ Decisions to Invest in Developing Countries: Empirical Evidence from New Swiss Firm-Level FDI Panel Data (March 19, 2014). NCCR Trade Regulation Working Paper No. 2014/01, Available at SSRN: https://ssrn.com/abstract=2411727 or http://dx.doi.org/10.2139/ssrn.2411727

Arno Hold (Contact Author)

University of Bern - World Trade Institute, NCCR Trade Regulation ( email )

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Bern, 3012
Switzerland
+41 31 631 32 70 (Phone)
+41 31 631 36 30 (Fax)

HOME PAGE: http://www.nccr-trade.org/people/hold/

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