Review of World Economics

, Volume 143, Issue 1, pp 55–78 | Cite as

Strategic Intellectual Property Rights Policy and North-South Technology Transfer



This paper analyzes welfare implications of protecting intellectual property rights (IPR) in the framework of TRIPS for developing countries (South) through its impact on innovation, market structure and technology transfer. In a North-South trade environment, the South sets its IPR policy strategically to manipulate multinationals’ decisions on innovation and location. Firms can protect their technology by exporting or risk spillovers by undertaking FDI to avoid tariffs. A stringent IPR regime is always optimal for the South as it triggers technology transfer by inducing FDI in less R&D-intensive industries and stimulates innovation by pushing multinationals to deter entry in high-technology sectors.


Intellectual property rights technology transfer multinational firms foreign direct investment North-South trade 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. 1.
    Braga, C. A. P., C. Fink, and C. Paz Sepulveda (2000). Intellectual Property Rights and Economic Development. Discussion Paper No. 412. World Bank, Washington, D.C.Google Scholar
  2. 2.
    Chin, J., and G. M. Grossman (1990). Intellectual Property Rights and North-South Trade. In R. Jones and A. O. Krueger (eds.), The Political Economy of International Trade. Oxford: Basi Blackwell.Google Scholar
  3. 3.
    Commission on Intellectual Property Rights (2002). Integrating Intellectual Property Rights and Development Policy. The Final Report of the Commission on Intellectual Property Rights, London.Google Scholar
  4. 4.
    Connolly, M., and D. Valderrama (2005). Implications of Intellectual Property Rights for Dynamic Gains from Trade. American Economic Review 95 (2): 318–322.Google Scholar
  5. 5.
    Deardorff, A. V. (1992). Welfare Effects of Global Patent Protection. Economica 59 (233): 35–51.Google Scholar
  6. 6.
    Ferrantino, M. J. (1993). The Effect of Intellectual Property Rights on International Trade and Investment. Weltwirtschaftliches Archiv/Review of World Economics 129 (2): 300–331.Google Scholar
  7. 7.
    Giannakas, K. (2002). Infringement of Intellectual Property Rights: Causes and Consequences. American Journal of Agricultural Economics 84 (2): 482–494.Google Scholar
  8. 8.
    Glass, A. J., and K. Saggi (2002). Intellectual Property Rights and Foreign Direct Investment. Journal of International Economics 56 (2): 387–410.Google Scholar
  9. 9.
    Grossman, G. M., and E. L.-C. Lai (2004). International Protection of Intellectual Property. American Economic Review 94 (5): 1635–1653.Google Scholar
  10. 10.
    Helpman, E. (1993). Innovation, Imitation, and Intellectual Property Rights. Econometrica 61 (6): 1247–1280.Google Scholar
  11. 11.
    Hobday, M. (1995). Innovation in East Asia: The Challenge to Japan. London: Aldershot.Google Scholar
  12. 12.
    Katz, J. M. (1987). Technology Creation in Latin American Manufacturing Industries. New York: St. Martin’s Press.Google Scholar
  13. 13.
    Lai, E. L.-C. (1998). International Intellectual Property Rights Protection and the Rate of Product Innovation. Journal of Development Economics 55 (1): 133–153.Google Scholar
  14. 14.
    Lai, E. L.-C, and L. D. Qiu (2003). The Northern Intellectual Property Rights Standard for the South? Journal of International Economics 59 (1): 183–209.Google Scholar
  15. 15.
    Leahy, D., and A. Naghavi (2006). Intellectual Property Rights and Entry into a Foreign Market: FDI vs. Joint Ventures. CEPR Discussion Paper 5672. Centre for Economic Policy Research, London.Google Scholar
  16. 16.
    Markusen, J. (2001). Contracts, Intellectual Property Rights, and Multinational Investment in Developing Countries. Journal of International Economics 53 (1): 189–204.Google Scholar
  17. 17.
    Maskus, K. E., and M. Penubarti (1995). How Trade-Related Are Intellectual Property Rights? Journal of International Economics 39 (3–4): 227–248.Google Scholar
  18. 18.
    Maskus, K. E. (1998). The Role of Intellectual Property Rights in Encouraging Foreign Direct Investment and Technology Transfer. Duke Journal of Comparative and International Law 9: 109–161.Google Scholar
  19. 19.
    Maskus, K. E. (2000a). Regulatory Standards in the WTO. Institute for International Economics Working Paper, Washington, D.C.Google Scholar
  20. 20.
    Maskus, K. E. (2000b). Intellectual Property Rights in the Global Economy. Washington, D.C.: Institute for International Economics.Google Scholar
  21. 21.
    McCalman, P. (2001). Reaping What You Sow: An Empirical Analysis of International Patent Harmonization. Journal of International Economics 55 (1): 161–186.Google Scholar
  22. 22.
    Neary, J. P. (2003). Globalization and Market Structure. Journal of the European Economic Association 1 (2–3): 245–271.Google Scholar
  23. 23.
    Pack, H., and K. Saggi (1997). Inflows of Foreign Technology and Indigenous Technological Development. Review of Development Economics 1 (1): 81–98.Google Scholar
  24. 24.
    Parente, S. L., and E. C. Prescott (1994). Barriers to Technology Adoption and Development. Journal of Political Economy 102 (2): 298–321.Google Scholar
  25. 25.
    Rhee, Y. W. (1990). The Catalyst Model of Development: Lessons from Bangladesh’s Success with Garment Exports. World Development 18 (2): 333–346.Google Scholar
  26. 26.
    Saggi, K. (2002). Trade, Foreign Direct Investment, and International Technology Transfer: A Survey. World Bank Research Observer 17 (2): 191–235.Google Scholar
  27. 27.
    Smarzynska Javorcik, B. (2004). Composition of Foreign Direct Investment and Protection of Intellectual Property Rights in Transition Economies. European Economic Review 48 (1): 39–62.Google Scholar
  28. 28.
    UNCTAD (1992). World Investment Report: Transnational Corporations as the Engine of Growth. New York: United Nations.Google Scholar
  29. 29.
    Vishwasrao, S. (1994). Intellectual Property Rights and the Mode of Technology Transfer. Journal of Development Economics 44 (2): 381–402.Google Scholar
  30. 30.
    Yang, G., and K. E. Maskus (2001). Intellectual Property Rights, Licensing, and Innovation in an Endogenous Product-Cycle Model. Journal of International Economics 53 (1): 169–187.Google Scholar
  31. 31.
    Zigic, K. (1998). Intellectual Property Rights Violations and Spillovers in North-South Trade. European Economic Review 42 (9): 1779–1799.Google Scholar
  32. 32.
    Zigic, K. (2000). Strategic Trade Policy, Intellectual Property Rights Protection, and North-South Trade. Journal of Development Economics 61 (1): 27–60.Google Scholar

Copyright information

© Kiel Institute 2007

Authors and Affiliations

  1. 1.Dipartimento di Economia PoliticaUniversita di Modena e Reggio EmiliaModenaItaly

Personalised recommendations