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Welfare Effects of Intellectual Property in a North-South Model of Endogenous Growth with Comparative Advantage

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  • Saint-Paul, Gilles
Abstract
This paper develops a model for analyzing the costs and benefits of intellectual property enforcement in LDCs. The North is more productive than the South and is the only source of innovator. There are two types of goods, and each bloc has a comparative advantage in producing a specific type of good. If comparative advantage is strong enough, even under piracy there are goods that the South will not produce. Piracy will then lead to a reallocation of innovative activity in favor of these goods. That may harm consumers (including consumers in the South) to the extent that these goods have smaller dynamic learning externalities than the other goods, and that their share in consumption is small. Thus, whether or not piracy is in the interest of the South depends on how important are the goods for which it has a comparative advantage to its consumers, and what the growth potential of these goods is. While, all else equal, the North tends to lose more (or gain less) from piracy than the South, because monopoly profits eventually accrue to the North, the South may lose more than the North if there is a strong enough home bias in favor of the goods for which it has a comparative advantage.

Suggested Citation

  • Saint-Paul, Gilles, 2008. "Welfare Effects of Intellectual Property in a North-South Model of Endogenous Growth with Comparative Advantage," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 2, pages 1-24.
    • Handle: RePEc:zbw:ifweej:6990
    DOI: 10.5018/economics-ejournal.ja.2008-5
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    1. Diwan, Ishac & Rodrik, Dani, 1991. "Patents, appropriate technology, and North-South trade," Journal of International Economics, Elsevier, vol. 30(1-2), pages 27-47, February.
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    Cited by:

    1. Gancia, Gino & Bonfiglioli, Alessandra, 2008. "North-South trade and directed technical change," Journal of International Economics, Elsevier, vol. 76(2), pages 276-295, December.
    2. Gino A.Gancia, 2003. "Globalization, Divergence and Stagnation," Development Working Papers 174, Centro Studi Luca d'Agliano, University of Milano.
    3. Léger, Andréanne, 2006. "Intellectual Property Rights and Innovation in Developing Countries: Evidence from Panel Data," Proceedings of the German Development Economics Conference, Berlin 2006 17, Verein für Socialpolitik, Research Committee Development Economics.
    4. Eicher, Theo & García-Peñalosa, Cecilia, 2008. "Endogenous strength of intellectual property rights: Implications for economic development and growth," European Economic Review, Elsevier, vol. 52(2), pages 237-258, February.
    5. Borota, Teodora, 2010. "Innovation and Imitation in a Model of North-South TradeRecent evidence on world trade patterns reveals North-South specialization across," Working Paper Series 2010:6, Uppsala University, Department of Economics.

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    More about this item

    Keywords

    Piracy; intellectual property; innovation; growth; comparative advantage;
    All these keywords.

    JEL classification:

    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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