Will Intellectual Property Rights Policy Increase Foreign Direct Investment and Promote Technological Innovation?

In this paper, we discuss the effects of intellectual property rights (IPRs) on FDI and indigenous innovation and the overall effects of IPR on the Southern and Northern countries. Our model predicts that tighter IPR is good for FDI and indigenous innovation; however, the effects vary according to t...

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Bibliographic Details
Published inMathematical problems in engineering Vol. 2021; pp. 1 - 11
Main Authors Hu, Debao, Liu, Zhengkai, Zhao, Jing
Format Journal Article
LanguageEnglish
Published New York Hindawi 2021
Hindawi Limited
Subjects
Absorptivity
Developing countries
Foreign investment
Game theory
Innovations
Intellectual property
LDCs
Mathematical problems
Product development
Property rights
Technological change
China
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Summary:In this paper, we discuss the effects of intellectual property rights (IPRs) on FDI and indigenous innovation and the overall effects of IPR on the Southern and Northern countries. Our model predicts that tighter IPR is good for FDI and indigenous innovation; however, the effects vary according to the initial resource endowment such as skill level and absorptive capacity. By a game theory model, we also find that tighter IPR benefits both sides if the innovation is the common knowledge to both players, and it improves indigenous innovation and welfare in a short term, but they will emerge in the long run. We also discuss the further direction to an empirical study. Finally, we make the following conclusion: IPR is part of business environment, and tighter IPR in progress is good for boosting welfare of both sides. It is time to build a better environment for IPR, but the cost of patent enforcement policy and the trade barrier must be taken into account.
ISSN:1024-123X
1563-5147
DOI:10.1155/2021/6672060