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Intellectual property rights, FDI, and technological development

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  • Xianzhong Yi
  • Alireza Naghavi

Abstract

This paper presents two simultaneous trade-offs faced by a developing country in protecting intellectual property rights (IPRs), namely (1) between attracting foreign direct investment and deterring international technology spillovers, and (2) between encouraging domestic innovation and suppressing technology diffusion. The optimal level of IPR protection depends on the technological capability of the host country. In less developed countries, IPRs should be just strong enough to induce FDI since international technology spillovers are the dominant source of technological development. A stronger level of IPR protection is instead recommended for more advanced emerging economies as a tool to exploit the potential of their domestic innovators. The results cast doubt on the adequacy of globally harmonized IPR standards that do not consider the level of development.

Suggested Citation

  • Xianzhong Yi & Alireza Naghavi, 2017. "Intellectual property rights, FDI, and technological development," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 26(4), pages 410-424, May.
    • Handle: RePEc:taf:jitecd:v:26:y:2017:i:4:p:410-424
    DOI: 10.1080/09638199.2016.1266380
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    References listed on IDEAS

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    1. Keith E. Maskus, 2000. "Intellectual Property Rights in the Global Economy," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 99, April.
    2. Amy Jocelyn Glass, 1999. "Imitation as a Stepping Stone to Innovation," Working Papers 99-11, Ohio State University, Department of Economics.
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    Cited by:

    1. Huiying Zhang & Yikang Liu, 2022. "Do Foreign Direct Investment and Migration Influence the Sustainable Development of Outward Foreign Direct Investment? From the Perspective of Intellectual Property Rights Protection," Sustainability, MDPI, vol. 14(9), pages 1-18, April.
    2. Tian Zengrui & Guillermo Andres Buitrago & Shoirahon Odilova, 2017. "Will a Collectivistic Culture protect your Intellectual Property? Effect of Individualism on Intellectual Property Protection," International Business Research, Canadian Center of Science and Education, vol. 10(11), pages 111-116, November.
    3. Heman Khouilla & Cécile Bastidon, 2024. "Does increased intellectual property rights protection foster innovation in developing countries? A literature review of innovation and catch‐up," Journal of International Development, John Wiley & Sons, Ltd., vol. 36(2), pages 1170-1188, March.

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