Effects of TRIPS on Growth, Welfare and Income Inequality in an R&D-Growth Model

Chu, Angus C. and Peng, Shin-Kun (2008): Effects of TRIPS on Growth, Welfare and Income Inequality in an R&D-Growth Model.

Abstract

What are the effects of the WTO's TRIPS Agreement on growth, welfare and income inequality? To analyze this question, we develop an open-economy R&D-driven endogenous-growth model with wealth heterogeneity. Under TRIPS, the North experiences higher growth and welfare at the expense of higher income inequality. As for the South, it experiences higher growth at the expense of lower welfare and higher income inequality. Also, there exists a critical degree for the domestic importance of foreign goods below which global welfare decreases under TRIPS. In light of our findings, we discuss policy implications on China’s accession to the WTO in 2001.

• Item Type: MPRA Paper
• Language: English
• Keywords: endogenous growth; heterogeneity; income inequality; patent policy; TRIPS
• Subjects: D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions; F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O34 - Intellectual Property and Intellectual Capital

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