حقوق مالکیت معنوی و سرمایه گذاری مستقیم خارجی

This paper develops a product cycle model with endogenous innovation, imitation, and foreign direct investment (FDI). We use this model to determine how stronger intellectual property rights (IPR) protection in the South affects innovation, imitation and FDI. We find that stronger IPR protection keeps multinationals safer from imitation, but no more so than Northern firms. Instead, the increased difficulty of imitation generates resource wasting and imitation disincentive effects that reduce both FDI and innovation. The greater resources absorbed in imitation crowd out FDI. Reduced FDI then transmits resource scarcity in the South back to the North and consequently contracts innovation.

In recent years, the literature on product cycle models has made some important strides. Yet while Vernon’s (1966) original vision of the product cycle assigns a central role to foreign direct investment (FDI), most models capturing his ideas cast imitation as the only channel of international technology transfer from an innovating region (the North) to an imitating region (the South) — see Krugman (1979), Grossman and Helpman (1991) and Segerstrom et al. (1990). Two recent exceptions are Helpman (1993) and Lai (1998); however, imitation is exogenous in these models. An important contribution of our paper is to provide a product cycle model in which innovation, imitation, and FDI are all endogenous.1 Starting from the quality ladders model of Grossman and Helpman (1991), we determine the composition of international technology transfer between imitation and FDI. A common perception is that due to local knowledge spillovers, Southern firms can more easily imitate the products of multinationals producing in the South relative to firms producing in the North. We formalize this idea by assuming that the costs of imitating a multinational’s product are lower than costs of imitating a Northern firm’s product. By distinguishing between imitation that targets the products of Northern firms and imitation that targets the products of multinationals, we are able to determine the effects of parameter changes on the imitation exposure of multinationals relative to Northern firms. We apply our model to determine the effects of increased intellectual property rights (IPR) protection in the South, which we assume increases the cost of imitation due to stricter uniqueness requirements. This increased cost results in an endogenous decline in imitation. While products like books, videos and compact disks receive much press about conflicts over IPR protection, imitating most products is not so simple. Empirical evidence indicates that imitation is a costly activity for a wide range of high technology goods, such as chemicals, drugs, electronics and machinery. For example, Mansfield et al. (1981) finds that the costs of imitation average 65% of the costs of innovation, and very few products were below 20%. Since Southern firms must devote substantial effort to backward engineering products prior to producing imitations, IPR protection may affect the effort required by specifying how similar an imitation can be to the original. We find that stronger Southern IPR protection makes multinationals more secure from imitation in absolute terms but no more secure from imitation relative to successful innovators still producing in the North. Consequently, stronger Southern IPR protection does not alter the expected profit stream from becoming a multinational relative to remaining a Northern firm and hence does not encourage FDI. The past literature could not address relative imitation exposure because imitation was exogenous. An interesting result of our model is that FDI decreases with a strengthening of Southern IPR protection. This result arises because an increase in the cost of imitation crowds out FDI through tighter Southern resource scarcity. Less efficient imitation absorbs more Southern resources despite the reduction in the rate of imitation stemming from the reduced profitability of imitation. Additionally, the contraction in FDI tightens Northern resource scarcity. Increased Northern production leaves fewer resources for innovation, so the rate of innovation falls. To highlight the forces behind our results, we show that an increased cost of imitation has both an imitation disincentive effect similar to a tax on imitation and a resource wasting effect similar to a reduction in the Southern labor supply. These two effects reinforce each other in reducing FDI and innovation. This decomposition demonstrates that even if the resource wasting consequences of stronger IPR protection were not present, the reduced incentive for imitation would still generate a reduction in FDI and innovation.

This paper examines the effect of strengthening Southern IPR protection on the imitation exposure of multinationals relative to Northern firms, the composition of international technology transfer, FDI, innovation and imitation. Given the lively policy debate on these issues (see Maskus, 2000), our analysis has more than theoretical interest. We focus on the case where FDI and imitation both serve as channels of international technology transfer, but Southern IPR protection crowds out FDI and innovation even when only one channel is present. In our model, stronger IPR protection in the South makes multinationals no more secure from imitation relative to Northern firms. Furthermore, by making imitation more costly, stronger Southern IPR protection forces the South to spend more resources for a given probability of imitation success. The scarce resources drawn into imitation in the South leave fewer resources for production, causing FDI to contract — a resource wasting effect that acts like a reduction in the Southern labor supply. The resources drawn into production in the North due to less FDI then leave fewer resources for innovation, causing innovation to contract as well. There is also an imitation disincentive effect that acts like a tax on imitation by making imitation more costly. Past work by Helpman (1993) and Lai (1998) assumed stronger Southern IPR protection caused an exogenous reduction in the intensity of imitation. Since imitation was assumed to be costless, no resource wasting effects resulted — no labor was absorbed into imitation because no labor was needed for imitation. In contrast, we assume stronger Southern IPR protection raises the cost of imitation, which then causes the intensities of imitation to fall. However, we show that more labor is used in imitation, which crowds out FDI and consequently reduces innovation. Our model has the property that the effect of strengthening Southern IPR protection on the rate of innovation does not depend on whether FDI or imitation is the channel of international technology transfer. Several related topics beg for further research. Firstly, a varieties product cycle model with endogenous innovation, imitation, and FDI would be useful for determining which, if any, of our results depend on the quality ladders framework. Secondly, a product cycle model with FDI should be modified to remove the scale effect (innovation increasing with the labor supply) to see how the results change. Thirdly, trade restrictions should be added to consider how they affect the transfer of technology across countries. Fourthly, more work could be done to capture the full complexity of a country’s IPR policy and thus derive further insights regarding policy alternatives. Finally, how Southern IPR protection affects internalization — whether Northern firms choose to license their technologies or opt for FDI — should be addressed.19 Nevertheless, the model constructed here sheds new light on the complex inter-relationships between innovation, imitation, and FDI.