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Intellectual property rights and skills accumulation: A product-cycle model of FDI and outsourcing

Hung-Ju Chen

Journal of Macroeconomics, 2015, vol. 46, issue C, 328-343

Abstract: This study investigates the effects of stronger intellectual property rights (IPR) protection in the South on innovation, skills accumulation, wage inequality, and patterns of production based on a North–South general-equilibrium model with foreign direct investment (FDI) and international outsourcing. We find that stronger Southern IPR protection raises the extent of outsourcing and reduces the extent of FDI. This increases the proportion of unskilled Southerners and mitigates Southern wage inequality. In the North, stronger Southern IPR protection raises the proportion of skilled Northerners and wage inequality. The effects of international specialization, R&D cost, and Northern population are also examined.

Keywords: FDI; Outsourcing; Quality ladder; Skill; Wage inequality (search for similar items in EconPapers)
JEL-codes: F12 F23 O31 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1016/j.jmacro.2015.10.008

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