Innovation, Intellectual Property Rights, and Economic Development: A Unified Empirical Investigation

SummaryTwo important strands of literature investigate the way the effect of intellectual property rights (IPR) on innovation depends on either the initial IPR level or the level of economic development. We expand on this by studying their joint effect, in a single, unified, empirical framework. We find that the effect of IPR on innovation is more complex than previously thought, displaying important nonlinearities depending on the initial levels of both IPR and per capita GDP. The policy implications of this are examined and include the conclusion that a single global level of IPR is in general sub-optimal.

► We study the joint effects of IPR and economic development on innovation.
► Nonlinearities of IPR on innovation are much complex than previously found.
► We find a family of curves, depending on GDP per capita, between IPR and innovation.
► We discuss the effects of a global reform that aims at increasing IPR level worldwide.
► The results suggest that a single IPR minimum standard as in TRIPS is sub-optimal.