Imitation and innovation driven development under imperfect intellectual property rights

Christian Lorenczik and Monique Newiak

European Economic Review, 2012, vol. 56, issue 7, 1361-1375

Abstract: Developing countries employ about two-fifth of the world's researchers, originate one quarter of world expenditures on R&D, and their inventions are subject to imitation. Nevertheless, the previous literature focuses on North–South setups in which the South is restricted to imitating northern inventions. To analyze the effects of IPR policies on developed and developing countries, we extend this literature to allow not only for southern innovation and imitation of northern goods, but also for imitation targeted at southern innovations. We find the effects of IPRs on R&D and welfare to be non-monotonic and dependent on innovation efficiency and an innovation threshold in the South. For sufficiently strong IPRs the South engages in original R&D and stronger IPRs promote southern innovation, welfare, and a reduction in the North–South wage gap. Below the threshold, a strengthening of IPR protection fails to promote innovation and decreases welfare. Stronger IPRs exclusively for southern firms can benefit both regions by shifting southern resources from the imitation of northern goods to original southern innovation.

Keywords: Innovation; Imitation; Economic growth; Intellectual property rights (search for similar items in EconPapers)
JEL-codes: F43 F55 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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Working Paper: Imitation and Innovation Driven Development under Imperfect Intellectual Property Rights (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:56:y:2012:i:7:p:1361-1375

DOI: 10.1016/j.euroecorev.2012.07.003

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