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INTELLECTUAL PROPERTY PROTECTION AND THE INDUSTRIAL COMPOSITION OF MULTINATIONAL ACTIVITY
Author(s) -
Ivus Olena,
Park Walter,
Saggi Kamal
Publication year - 2016
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12314
Subject(s) - multinational corporation , foreign direct investment , imitation , intellectual property , international trade , technology transfer , economics , composition (language) , investment (military) , international economics , business , industrial organization , macroeconomics , law , political science , psychology , social psychology , linguistics , philosophy , finance , politics
In a North‐South model with endogenous foreign direct investment ( FDI ), we examine the impact of Southern intellectual property rights ( IPR ) protection on the mode and industrial composition of international technology transfer. A novel feature of the model is that, due to technological reasons, industries differ with respect to their susceptibility to imitation. In equilibrium, licensing occurs in industries where the risk of imitation is low and FDI where it is of intermediate magnitude. Stronger IPRs in the South (1) alter the industrial composition of multinational activity toward licensing at the expense of FDI ; (2) reduce local imitation; and (3) increase licensing and, to a lesser extent, FDI . ( JEL F10, O34)