Innovating like China : a theory of stage-dependent intellectual property rights

Chu, Angus; Cozzi, Guido; Galli, Silvia

Innovating like China : a theory of stage-dependent intellectual property rights

Chu, Angus; Cozzi, Guido; Galli, Silvia

Authors

Angus Chu

Guido Cozzi

Silvia Galli

Abstract

Inspired by the Chinese experience, we develop a Schumpeterian growth model of distance to frontier in which economic growth in the developing country is driven by domestic innovation as well as imitation and transfer of foreign technologies through foreign direct investment. We show that optimal intellectual property rights (IPR) protection is stage-dependent. At an early stage of development, the country implements weak IPR protection to facilitate imitation. At a later stage of development, the country implements strong IPR protection to encourage domestic innovation. We also calibrate the model to aggregate data of the Chinese economy to simulate the optimal path of patent strength, which is increasing as the country evolves towards the world technology frontier, and this dynamic pattern is consistent with the actual evolution of the patent system in China. Furthermore, we provide empirical evidence based on a dynamic panel regression to support the key mechanism in our theoretical model.

Citation

Chu, A., Cozzi, G., & Galli, S. (2011). Innovating like China : a theory of stage-dependent intellectual property rights

Publication Date	Nov 26, 2011
Deposit Date	Dec 7, 2012
Publicly Available Date	Dec 7, 2012
Series Title	Durham University Business School Economics Finance Accounting Working Papers
Keywords	Economic growth, Stage-dependent intellectual property rights, JEL classifcation: O31 O34 O40.
Public URL	https://durham-repository.worktribe.com/output/1699595
Publisher URL	http://www.dur.ac.uk/business/faculty/working-papers/