Intellectual property rights,informal economy,and FDI into developing countries |
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Authors: | Minsoo Lee Joseph D. Alba Donghyun Park |
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Affiliation: | 1. Economic Research and Regional Cooperation Department, Asian Development Bank, 6 ADB Avenue, 1550 Metro Manila, Philippines;2. Division of Economics, Nanyang Technological University, 14 Nanyang Drive 04-79, SG 637332, Singapore |
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Abstract: | We explore the relationship between intellectual property rights (IPR), the informal economy, and foreign direct investment (FDI) into developing countries. Intuitively, stronger IPR protection attracts more FDI in countries with small informal economies but not in countries with large informal economies. The intuition is that the informal economy is a proxy for the quality of institutions. In institutionally strong countries, IPR protection promotes FDI by reducing illegal imitation and freeing up more resources for MNCs. Our empirical analysis, based on a threshold effect model, provides some evidence supportive of our model. |
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Keywords: | F23 O17 O34 Intellectual property rights Foreign direct investment Informal economy Institutions Asia |
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