Do Stronger Intellectual Property Rights Increase Innovation?

Do stronger intellectual property rights (IPR) increase innovation? Recent decades have seen a global transformation in IPR standards, underpinned by the theory that stronger IPRs spur increased incentives to innovate. This study tests the impact of ever more rigorous IPR systems on innovation through an index of economic complexity of 94 countries from 1965 to 2005. Our results confirm that stronger intellectual property systems engender higher levels of economic complexity. Nevertheless, only countries with an initial above-average level of development and complexity enjoy this effect.