The effect of intellectual property protection on innovation: Empirical analysis of developing countries panel

Saïd Hammami

African Journal of Science, Technology, Innovation and Development, 2021, vol. 13, issue 4, 397-405

Abstract: This paper aims to test the impact of intellectual property protection reforms on the dynamic of technological progress within sampled developing countries. The dependency of the Intellectual Property Rights (IPR’s) rule enforcement on the stage of economic development is broadly shared in the literature; however, the innovation-IPR’s nexus issue is more controversial. We argue that IPR’s effect on innovation depends on the national absorptive capacity, that is the capacity of the country to detect, analyze and use the new technology. Using a panel data fixed effect (FE), instrumental variable (IV) and negative binomial models (NEGBIN), and controlling for heterogeneity between the countries, three important results emerge. Firstly, we find that IPRs are negatively correlated with innovations in the sample. Secondly, the absorptive capacity has a positive effect on technological progress. Thirdly, the deeper the absorptive capacity is, the higher the expected negative effect of IPRs. We explain this outcome by the fact that IPRs would increase the small and incremental cost of innovation and hinder the possibility of inventing around when the country has developed some basic technological capabilities, otherwise the effect will be marginal. Further policy issues are discussed.

Date: 2021
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DOI: 10.1080/20421338.2020.1824608

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