TY  - JOUR
AU  - Branstetter,Lee
AU  - Saggi,Kamal
TI  - Intellectual Property Rights, Foreign Direct Investment, and Industrial Development
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15393
PY  - 2009
Y2  - October 2009
UR  - http://www.nber.org/papers/w15393
L1  - http://www.nber.org/papers/w15393.pdf
N1  - Author contact info:
Lee G. Branstetter
Heinz College
School of Public Policy and Management
Department of Social and Decision Sciences
Carnegie Mellon University
Pittsburgh, PA  15213
Tel: 412/268-4649
E-Mail: branstet@andrew.cmu.edu

Kamal Saggi
Vanderbilt University
Department of Economics
VU Station B# 351828
2301 Vanderbilt Place
Nashville, TN 37235-1828
Tel: (615)322 3237
Fax: 615-343-2391
E-Mail: k.saggi@vanderbilt.edu
AB  - This paper develops a North-South product model in which Southern imitation and the North-South flow of foreign direct investment (FDI) are endogenously determined. In the model, a strengthening of IPR protection in the South reduces the rate of imitation, which, in turn, increases the flow of FDI. The increase in FDI more than offsets the decline in production undertaken by Southern imitators, so that the South’s share of goods produced by the global economy increases. Furthermore, real wages of Southern workers increase even though prices of goods produced by multinationals exceed those of Southern imitators. The preceding results hold when Northern innovation is endogenously determined; in addition, the rate of innovation increases with a strengthening of Southern IPR protection.
ER  -