Chapter 12: The Vulnerability of Middle Developed Countries to Changes in Foreign Investment Arising from Intellectual Property Appropriation
12. The vulnerability of middle developed countries to changes in foreign direct investment arising from intellectual property appropriation Robert C. Bird* and Daniel R. Cahoy** INTRODUCTION Intellectual property has become an increasingly important facet of global commerce. It is hard to imagine a negotiation concerning trade between nations that does not address the protection or use of these key property rights. Whether the issue is piracy, investment or development, both the developed and developing worlds now recognize a signiﬁcant interest in designing functional intellectual property systems. Signiﬁcantly, beliefs regarding the appropriate degree of intellectual property rights are not universally shared among nations. Industrialized nations – generally in control of the most valuable IP assets – view strong, dependable protection as a cornerstone to an eﬃcient global business environment. Developing nations may share these ideals to a great degree, but many see the additional need for signiﬁcant limitations in order to promote local interests, such as health care. This diﬀerence of opinion can lead to signiﬁcant conﬂict. The most studied aspect of developed–developing nation conﬂict in intellectual property rights protection has been in its eﬀect on innovation. However, a secondary eﬀect involving foreign direct investment may be more important for its ability to inﬂuence the debate. In particular, a ﬁrm’s reduction in foreign direct investment in response to a relaxation of intellectual property rights is a function that can have dramatic eﬀects in some countries, but not others. The most...
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