Intellectual property rights and economic growth: The case of middle income developing countries

Abstract

Neoclassical growth theory emphasises the role of intellectual property rights (IPRs) in the economic growth process through different channels like international trade, foreign direct investment (FDI), licencing, and research and development (R & D). We estimated the impact of IPRs protection on economic growth for a panel of ten middle-income developing countries, using pooled least square estimation techniques by applying both fixed and random effect models, and both unbalanced data from 1960-2005 and balanced data from 1970-2005. Both fixed and random effect models do not support the positive link between IPRs and economic growth. This suggests that although IPRs protection stimulates economic growth, yet these developing countries are at the transitional stage of their economic development and the cost of innovation is higher than the cost of imitation. This means that these middle-income developing economies are not well-prepared to accept this challenge at the present stage of economic and infrastructural development. © The Pakistan Development Review.