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Intellectual property rights and foreign direct investment: A welfare analysis

Hitoshi Tanaka and Tatsuro Iwaisako ()

European Economic Review, 2014, vol. 67, issue C, 107-124

Abstract: This paper examines how intellectual property rights (IPR) protection affects innovation and foreign direct investment (FDI) using a North–South quality-ladder model incorporating the exogenous and costless imitation of technology and subsidy policies for both R&D and FDI. We show that for the interior steady state to be stable, either R&D or FDI subsidy rates must be positive. Our findings also indicate that strengthening IPR protection promotes both innovation and FDI. Moreover, a strengthening of IPR protection can also improve welfare if the initial IPR protection in the South is weak and the R&D subsidy rate is not too high.

Keywords: Foreign direct investment; Innovation; Intellectual property rights protection (search for similar items in EconPapers)
JEL-codes: F43 O33 O34 (search for similar items in EconPapers)
Date: 2014
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Related works:
Working Paper: Intellectual Property Rights and Foreign Direct Investment: A Welfare Analysis (2013)
Working Paper: Intellectual Property Rights and Foreign Direct Investment: A Welfare Analysis (2013) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:67:y:2014:i:c:p:107-124

DOI: 10.1016/j.euroecorev.2014.01.013

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