Patent rights protection and foreign direct investment in Asian countries

Patent rights (PRs) protection has acquired an important role in the new knowledge-based global economy, and it has been an essential policy issue for a number of years. Many previous papers have examined how PRs protection affects international trade, but there is lack of study on the relationship between PRs protection and foreign direct investment (FDI). According to the active FDI activities in Asia, this paper conducts a research from 1985 to 2010 to completely investigate the relationship between PRs protection and inward FDI in eleven main Asian countries by adopting Ordinary Least Square (OLS) and System Generalized Method of Moments (System GMM). The empirical results indicate that strengthening PRs protection in host countries can increase Asian countries' FDI inflows. Moreover, different country characteristics might make distinctive influences on inward FDI.