Composition of Foreign Direct Investment and Protection of Intellectual Property Rights in Transition Economies

Beata Javorcik

No 2228, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Using a unique firm-level dataset this study shows that, contrary to the hopes of transition economies, foreign investors in the region are characterized by low, rather than high, R&D intensity. The results also indicate that investors with higher R&D spending are more likely to engage in non-manufacturing projects than in local production. The empirical analysis links these findings to weak protection of intellectual property rights (IPRs). It shows that weak protection deters foreign investment. This negative effect is especially strong in those technology-intensive sectors that, according to surveys, rely heavily on IPRs. Weak IPR protection also encourages investors to undertake non-manufacturing projects rather than local production. The study contributes to the literature on transition, in which the issue of IPR protection has been neglected. It also adds to the literature on intellectual property rights by providing empirical evidence on the effect of IPR protection on the composition of FDI inflows.

Keywords: Foreign Direct Investment; intellectual property rights; Transition Economies (search for similar items in EconPapers)
JEL-codes: F23 O34 (search for similar items in EconPapers)
Date: 1999-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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