GEP Research Paper 04/12
Intellectual Property Rights and Economic Growth
Rod Falvey, Neil Foster and David Greenaway
Abstract
Interest in links between protection of intellectual property and growth has been revived by developments in new growth theory and by the WTO's TRIPS Agreement. The relationship between the strength of a country's intellectual property rights (IPRs) regime and its rate of growth is theoretically ambiguous, reflecting the variety of channels through which technology can be acquired and their differing importance at different levels of development. In this paper, we investigate the impact of IPR protection on economic growth in a panel data of 80 countries using threshold regression analysis. We show that whilst the impact of IPR protection on growth depends upon the level of development, IPR protection is positively and significantly related to growth for low- and high-income countries, but not for middle-income countries. This suggests that, while IPR protection encourages innovation in high-income countries, and technology flows to low income countries, middle-income countries may have offsetting losses from reduced scope for imitation.
Issued in May 2004.
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