INTELLECTUAL PROPERTY PROTECTION AND THE INDUSTRIAL COMPOSITION OF MULTINATIONAL ACTIVITY |
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| Authors: | Olena Ivus Walter Park Kamal Saggi |
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| Institution: | 1. 613 533‐2373613 533-2744;2. Assistant Professor of Business Economics, Smith School of Business, Queen's University, Kingston, Canada;3. 202 885‐3774202 885-3790;4. Professor of Economics, Department of Economics, American University, Washington, DC |
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| Abstract: | In a North‐South model with endogenous foreign direct investment (FDI), we examine the impact of Southern intellectual property rights (IPR) protection on the mode and industrial composition of international technology transfer. A novel feature of the model is that, due to technological reasons, industries differ with respect to their susceptibility to imitation. In equilibrium, licensing occurs in industries where the risk of imitation is low and FDI where it is of intermediate magnitude. Stronger IPRs in the South (1) alter the industrial composition of multinational activity toward licensing at the expense of FDI; (2) reduce local imitation; and (3) increase licensing and, to a lesser extent, FDI. (JEL F10, O34) |
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