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Dynamics of Human Capital Accumulation, IPR Policy, and Growth

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  • Bharat Diwakar
  • Gilad Sorek

Abstract

We study the effect of IPR (Intellectual Property Rights) policy on growth, in a closed overlapping-generations economy, which undergoes transitional development phase of human capital accumulation. We show that the growth-maximizing policy is stage-dependent: in the early development phase, during which innovation cost is high relative to worker productivity, weak IPR protection can expedite economic growth and may be necessary to escape long run stagnation. Weaker IPR protection erodes monopolistic deadweight loss and, thereby, increases aggregate output and saving. However, it also shifts investment away from R&D activity towards the formation of physical capital. We show that the former (positive) effect is dominant during the early development phase. However, as human capital is further accumulated, and labor productivity correspondingly increases, economic growth is maximized with stronger IPR protection.

Suggested Citation

  • Bharat Diwakar & Gilad Sorek, 2016. "Dynamics of Human Capital Accumulation, IPR Policy, and Growth," Auburn Economics Working Paper Series auwp2016-11, Department of Economics, Auburn University.
    • Handle: RePEc:abn:wpaper:auwp2016-11
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    File URL: https://cla.auburn.edu/econwp/Archives/2016/2016-11.pdf
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    References listed on IDEAS

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    1. Uhlig, Harald & Yanagawa, Noriyuki, 1996. "Increasing the capital income tax may lead to faster growth," European Economic Review, Elsevier, vol. 40(8), pages 1521-1540, November.
    2. Philippe Aghion & Peter Howitt, 2009. "The Economics of Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 9780262012638, April.
    3. G. M.P. Swann, 2009. "The Economics of Innovation," Books, Edward Elgar Publishing, number 13211.
    4. Daron Acemoglu & Ufuk Akcigit, 2012. "Intellectual Property Rights Policy, Competition And Innovation," Journal of the European Economic Association, European Economic Association, vol. 10(1), pages 1-42, February.
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    Cited by:

    1. Diwakar, Bharat & Sorek, Gilad & Stern, Michael, 2021. "Patents And Growth In Olg Economy With Physical Capital," Macroeconomic Dynamics, Cambridge University Press, vol. 25(2), pages 489-508, March.

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    More about this item

    Keywords

    Stage-Dependent IPR; OLG; Human Capital; Development and 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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