Munich Personal RePEc Archive

Intellectual Property Rights and Skills Accumulation: A North-South Model of FDI and Outsourcing

Chen, Hung-Ju (2013): Intellectual Property Rights and Skills Accumulation: A North-South Model of FDI and Outsourcing.

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Abstract

This study investigates the effects of stronger intellectual property rights (IPR) protection in the South on innovation, skills choice, wage inequality and patterns of production based on a North-South general-equilibrium model with foreign direct investment (FDI) and international outsourcing. We find that stronger IPR protection in the South raises the extent of outsourcing and reduces the extent of FDI. This raises the proportion of Southerners being unskilled and mitigates wage inequality in the South. In the North, stronger Southern IPR protection raises the proportion of Northerners being skilled and wage inequality. The effects of international specialization, R&D cost and Northern population are also examined.

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