Distance to frontier, intellectual property rights, and economic growth
Economics of Innovation and New Technology, 2010, vol. 19, issue 2, 165-183
This article examines the effects of intellectual property rights (IPR) protection on growth and convergence. Firms in a country undertake both innovation and imitation to improve their productivity. IPR protection reduces the cost of innovation, but makes imitation more costly. Countries at early stages of growth adopt a strategy of high effort on imitation, and switch to the strategy of high effort on innovation at some point. A higher degree of IPR protection makes the switch to the strategy of high effort on innovation earlier. There are two possible growth traps. A middle-income trap arises when a country fails to switch to high effort on innovation due to a low degree of IPR protection. Whereas a poverty trap may exist at the early stage of development, when there is no enough effort on imitation due to a strict IPR protection.
Keywords: innovation; imitation; intellectual property rights; convergence; traps (search for similar items in EconPapers)
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