Appropriate intellectual property protection and economic growth in countries at different levels of development

This paper provides an empirical analysis of the extent to which stronger intellectual property rights (IPRs) influence economic growth, controlling for other factors. Patent protection is found to have differential effects on developed countries and developing countries. Patent rights have a positive influence on the incentive to innovate in developed countries but a statistically insignificant one in developing countries. However, a secondtier form of IPR – namely utility model patents (or petty patents) – does have a positive influence on developing country innovation and growth. Thus the results indicate that patent protection enhances innovation, and ultimately economic growth, in countries where the capacity to conduct innovative R&D exists. Where this capacity is weaker, a system of IPRs that protects minor, incremental inventions is more conducive to innovation, technological diffusion, and economic growth. The significance of this paper is to help shift the focus of the debate away from the strength of IPRs to the appropriate types of IPR for economic development.