Endogenous Enforcement of Intellectual Property, North-South Trade, and Growth

Abstract

After most countries have harmonized intellectual property rights (IPR) legislation as a consequence of signing the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), the dispute about the optimal level of IPR-protection has shifted towards IPR-enforcement. This paper develops an endogenous growth framework with two open economies satisfying the classical North-South assumptions to study (a) the regions' incentives to enforce IPR in a decentralized game, (b) the desired IPR-enforcement of the two regions in negotiation rounds on global harmonization and (c) the constrained-efficient enforcement level. We show how the different solutions relate to each other and how the results depend on the research productivity in the North and the regions' relative market sizes. While growth rates substantially increase when IPR-enforcement is harmonized at the North's desired level, our numerical simulation suggests that the South may also benefit in terms of long-run welfare.

A Note on the Implications of Automation for Economic Growth and the Labor Share

“…2. See Schäfer and Schneider (2014) and Prettner and Strulik (2016) for recent frameworks in which (endogenous) technological progress is the main engine of long-run economic growth.…”

Endogenous Enforcement of Intellectual Property, North–south Trade, and Growth

“…Moreover, any transitional dynamics of the technology stock would result from transitional dynamics in the expectations on future IPR protection t+2 . A formal characterization of the stability of the steady state can be found in the working paper version [Schäfer and Schneider (2013)]. …”

“…This makes it necessary to operate via the first-order conditions using the implicit-function theorem and making several estimates. The detailed formal proof is provided in the working paper version [Schäfer and Schneider (2013)]. …”

“…This proves item (iii) of Proposition 7. The detailed formal proof is provided in the working paper version [Schäfer and Schneider (2013)]. …”

“…57. Details on how ω x n is derived can be found in the extended appendix of Schäfer and Schneider (2013).…”