Intellectual Property for Economic Development

Intellectual Property for Economic Development

KDI series in Economic Policy and Development

Edited by Sanghoon Ahn, Bronwyn H. Hall and Keun Lee

Protection of intellectual property rights (IPRs) serves a dual role in economic development. While it promotes innovation by providing legal protection of inventions, it may retard catch-up and learning by restricting the diffusion of innovations. Does stronger IPR protection in a developing country encourage technology development in or technology transfer to that country? This book aims to address the issue, covering diverse forms of IPRs, diverse actors in innovation, and diverse cases from Asia and Latin America.

Chapter 3: Channels of technology transfer and intellectual property rights in developing countries

Walter G. Park and Douglas Lippoldt

Subjects: economics and finance, development economics, intellectual property, law and economics, innovation and technology, intellectual property


This chapter presents an empirical analysis of the influence of the strength of intellectual property rights (IPRs) on technology transfer to developing nations. The core contribution is to analyze the relationship between various measures of technology transfer and a set of indexes that quantify the strength of IPRs based on case laws and statutes, while controlling for other factors. The modes of technology transfer examined include services trade (including the licensing of intangible assets), merchandise trade, and foreign direct investment (FDI). The study also evaluates the relationship of IPR strengthening and the associated technology transfer to the evolution of local innovative capacity of developing countries using data on research and development (R & D) and patenting by residents and non-residents. For the analysis the authors have assembled a large data set covering a broad international panel of countries for the time frame 1990 to 2005. The time frame and country coverage are significantly expanded in comparison with previous studies on IPRs. A central issue in academic and policy debate is not only the influence of IPRs on technology transfer but on whether IPRs induce technologically intensive transfers. In other words, how substantive are the induced technology transfers, if any? It is possible that IPR reforms primarily induce foreign investment in wholesale trade operations or in low wage manufacturing facilities. This chapter evaluates the technological content of technology transfers in several ways.

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