Intellectual Property Rights, Foreign Direct Investment and Innovation

OSU 95-06

Posted: 22 May 1998

See all articles by Amy Jocelyn Glass

Amy Jocelyn Glass

Texas A&M University - Department of Economics

Kamal Saggi

Southern Methodist University (SMU) - Department of Economics

Date Written: August 1997

Abstract

This paper develops a product cycle model with endogenous and costly innovation, imitation, and foreign direct investment (FDI) to address the concerns of developing nations that stronger intellectual property rights (IPR) protection would force them to waste scarce resources 'reinventing the wheel.' With stronger IPR protection, multinationals become safer from imitation, but no safer than Northern firms. Imitation becomes a more predominant channel of international technology transfer relative to FDI. Stronger IPR protection displaces FDI due to aggravated resource scarcity in the South. Reduced FDI transmits resource scarcity in the South back to the North and consequently contracts innovation.

JEL Classification: F21, F43, O31, O34

Suggested Citation

Glass, Amy Jocelyn and Saggi, Kamal, Intellectual Property Rights, Foreign Direct Investment and Innovation (August 1997). OSU 95-06, Available at SSRN: https://ssrn.com/abstract=79466

Amy Jocelyn Glass (Contact Author)

Texas A&M University - Department of Economics ( email )

5201 University Blvd.
College Station, TX 77843-4228
United States
979-845-8507 (Phone)
979-847-8757 (Fax)

Kamal Saggi

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

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

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