Intellectual property rights, informal economy, and FDI into developing countries

Minsoo Lee, Joseph Alba and Donghyun Park

Journal of Policy Modeling, 2018, vol. 40, issue 5, 1067-1081

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.

Keywords: Intellectual property rights; Foreign direct investment; Informal economy; Institutions; Asia (search for similar items in EconPapers)
JEL-codes: F23 O17 O34 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:40:y:2018:i:5:p:1067-1081

DOI: 10.1016/j.jpolmod.2018.07.003

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