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Keywords:

  • F1;
  • O33;
  • O34
  • North-South;
  • Technological Diffusion;
  • Imitation;
  • Intellectual Property Rights;
  • Welfare

ABSTRACT

This paper proposes a simple model of the trade-offs perceived by innovating firms when investing in countries with limited intellectual property rights (IPR). The model allows for a continuous treatment of technology transfer and production cost gains occurring through FDI. While it does not consider possible changes in rates of innovation caused by changes in IPR in developing countries, it allows one to uncover a potentially non-monotonic relationship between welfare and IPR in the recipient country.