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Economic Development and Stage-Dependent IPR

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  • Bharat Diwakar
  • Gilad Sorek

Abstract

We study growth-maximizing Intellectual Property Rights (IPR) policy for developing economy in a close Overlapping-Generations model. We first show that R&D-based growth in such economy is subject to threshold externalities and transitional dynamics. Then we show that the IPR policy that maximizes output growth rates is stage-dependent: in early phases of development weak IPR protection may be necessary to sustain and to fasten economic growth. This is because weaker IPR protection shifts income from the old to the young generation and thereby enhancing saving and investment, which otherwise are insu¢cient to initiate growth. However as the economy develops and growth sustains optimal IPR protection tightens.

Suggested Citation

  • Bharat Diwakar & Gilad Sorek, 2015. "Economic Development and Stage-Dependent IPR," Auburn Economics Working Paper Series auwp2015-16, Department of Economics, Auburn University.
    • Handle: RePEc:abn:wpaper:auwp2015-16
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    More about this item

    Keywords

    Stage-Dependent IPR; OLG; Poverty Trap; Growth;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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