Monday Research Seminar Series
January 21, Lee Branstetter
Noon, Hamburg Hall, Room 1502
Intellectual Property Rights, Imitation, Foreign Direct Investment: Theory and Evidence
This paper theoretically and empirically analyzes the effect of stronger intellectual property rights on industrial development in developing countries. We develop a North-South product cycle model which predicts that IPR reform in the South leads to increased FDI from the North, accelerating Southern industrial development. We test the model’s predictions by analyzing responses of U.S.-based multinationals and domestic industrial production to IPR reforms in the 1980s and 1990s. We find that MNCs expand the scale of their activities in reforming countries after IPR reform. This more than offsets any decline in the imitative activity of indigenous firms.
