Jump to ContentJump to Main Navigation
Show Summary Details
More options …

The B.E. Journal of Macroeconomics

Editor-in-Chief: Cavalcanti, Tiago / Kambourov, Gueorgui

Ed. by Abraham, Arpad / Carceles-Poveda , Eva / Debortoli, Davide / Lambertini, Luisa / Nimark, Kristoffer / Wang, Pengfei

2 Issues per year


IMPACT FACTOR 2016: 0.043
5-year IMPACT FACTOR: 0.376

CiteScore 2016: 0.36

SCImago Journal Rank (SJR) 2016: 0.312
Source Normalized Impact per Paper (SNIP) 2016: 0.272

Online
ISSN
1935-1690
See all formats and pricing
More options …

The role of IPRs on prices, wages and growth in a two country directed technical change model

Óscar Afonso
  • Corresponding author
  • University of Porto, Faculty of Economics, CEFAGE-UBI, and OBEGEF, Rua Dr. Roberto Frias, 4200–464 Porto, Portugal
  • Email
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
Published Online: 2017-08-24 | DOI: https://doi.org/10.1515/bejm-2017-0070

Abstract

We develop a two country, Innovator and Follower, directed technical change model between tradable and nontradable sectors. The Innovator performs innovative R&D. The Follower imitates, in a pre-trade context, and adopts, in a trade scenario, the available technological knowledge. We start by considering the pre-trade context and then we analyze the trade scenario. In both regimes – imitation and adoption – and in BGP, international IPRs protection, R&D productivity, scale-effects intensity and substitutability between sectors determine the stable and unique worldwide economic growth rate and the technological-knowledge bias, which, in turn, affects relative prices and wages. Depending on IPRs protection, imitation and adoption can either amplify or slow down the technological-knowledge bias and thus the real exchange rate, the wage inequality and the worldwide growth rate. For example, under technological-knowledge adoption with positive international IPRs protection and substitutability, wages tend to be higher in the Innovator, technological knowledge and intra-country wage inequality are biased towards the tradable sector, and the real exchange rate accommodates the Balassa-Samuelson proposal.

Keywords: directed technological change; international trade; intellectual property rights; scale effects; prices; wages; economic growth

JEL Classification: O30; O41; F10; F43; J31

References

  • Acemoglu, D. 2002. “Directed Technical Change.” Review of Economic Studies 69 (4): 781–809.CrossrefGoogle Scholar

  • Acemoglu, D. 2003. “Patterns of Skill Premia.” Review of Economic Studies 70: 199–230.CrossrefGoogle Scholar

  • Acemoglu, D. 2008. Introduction to Modern Economic Growth. Princeton, NJ: Princeton University Press.Google Scholar

  • Acemoglu, D., and F. Zilibotti. 2001. “Productivity differences.” Quarterly Journal of Economics 116: 563–606.CrossrefGoogle Scholar

  • Acemoglu, D., G. Gancia, and F. Zilibotti. 2012. “Competing Engines of Growth: Innovation and Standardization.” Journal of Economic Theory 147 (2): 570–601.CrossrefGoogle Scholar

  • Afonso, O. 2012. “Scale-Independent North-South Trade Effects on the Technological-Knowledge Bias and on Wage Inequality.” Review of World Economics 148 (1): 181–207.CrossrefGoogle Scholar

  • Aghion, P., and P. Howitt. 1992. “A Model of Growth Through Creative Destruction.” Econometrica 60 (2): 323–352.CrossrefGoogle Scholar

  • Alesina, A., and E. Spolaore. 1997. “On the Number and Size of Nations.” Quarterly Journal of Economics 112 (4): 1027–1056.CrossrefGoogle Scholar

  • Akiyama, T., and Y. Furukawa. 2009. “Intellectual Property Rights and Appropriability of Innovation.” Economics Letters 103: 138–141.CrossrefGoogle Scholar

  • Ang, J. B., and J. B. Madsen. 2015. “Imitation Versus Innovation in an Aging Society: International Evidence Since 1870.” Journal of Population Economics 28 (2): 299–327.CrossrefGoogle Scholar

  • Arkolakis, C., A. Costinot, and A. RodrÌguez-Clare. 2012. “New Trade Models, Same Old Gains?” American Economic Review 102 (1): 94–130.CrossrefGoogle Scholar

  • Azevedo, M., O. Afonso, and S. Silva. 2014. “Endogenous Growth and Intellectual Property Rights: A North-South Modelling Proposal.” Economic Modelling 38: 112–120.CrossrefGoogle Scholar

  • Balassa, B. 1964. “The Purchasing-Power Parity Doctrine: A Reappraisal.” Journal of Political Economy 72 (6): 584–596.CrossrefGoogle Scholar

  • Barro, R., and X. Sala-i-Martin. 1997. “Technological Diffusion, Convergence, and Growth.” Journal of Economic Growth 2 (1): 1–26.CrossrefGoogle Scholar

  • Barro, R., and X. Sala-i-Martin. 2004. Economic Growth., 2nd ed. Cambridge, MA: MIT Press.Google Scholar

  • Bastos, P., and J. Silva. 2010. “The Quality of a Firm’s Exports: Where You Export to Matters.” Journal of International Economics 82 (2): 99–111.CrossrefGoogle Scholar

  • Becker, G., and K. Murphy. 1992. “The Division of Labour, Coordination Costs, and Knowledge.” Quarterly Journal of Economics 107: 1137–1160.CrossrefGoogle Scholar

  • Berka, M., and M. B. Devereux. 2013. “Trends in European Real Exchange Rates.” Economic Policy 28 (74): 193–242.CrossrefGoogle Scholar

  • Berman, E., J. Bound, and S. Machin. 1998. “Implications of Skill-Biased Technological Change: International Evidence.” Quarterly Journal of Economics 113 (4): 1245–1279.CrossrefGoogle Scholar

  • Bernard, A. B., and J. B. Jensen. 1999. “Exceptional Exporter Performance: Cause, Effect, or Both?” Journal of International Economics 47: 1–25.CrossrefGoogle Scholar

  • Bernard, A. B., and J. B. Jensen. 2004. “Why Some Firms Export.” Review of Economics and Statistics 86: 561–569.CrossrefGoogle Scholar

  • Bernard, A. B., J. B. Jensen, S. J. Redding, and P. K. Schott. 2007. “Firms in International Trade.” Journal of Economic Perspectives 12: 105–130.CrossrefGoogle Scholar

  • Bernard, A. B., J. B. Jensen, and P. K. Schott. 2006. “Survival of the Best Fit: Exposure to Low-Wage Countries and the (Uneven) Growth of US Manufacturing Plants.” Journal of International Economics 68: 219–237.CrossrefGoogle Scholar

  • Bernard, A. B., and C. I. Jones. 1996a. “Productivity Across Industries and Countries: Time Series Theory and Evidence.” Review of Economics and Statistics 78 (1): 135–146.CrossrefGoogle Scholar

  • Bernard, A. B., and C. I. Jones. 1996b. “Comparing Apples to Oranges: Convergence and Measurement Across Industries and Countries.” American Economic Review 86 (5): 1216–1238.Google Scholar

  • Borensztein, E., J. D. Gregorio, and J.-W. Lee. 1998. “How Does Foreign Direct Investment Act Economic Growth?” Journal of International Economics 45: 115–135.CrossrefGoogle Scholar

  • Brambilla, I., D. Lederman, and G. Porto. 2012. “Exports, Export Destinations, and Skills.” American Economic Review 102 (7): 3406–3438.CrossrefGoogle Scholar

  • Carvalho, C., and F. Nechio. 2011. “Aggregation and the PPP Puzzle in a Sticky-Price Model.” American Economic Review 101: 2391–2424.CrossrefGoogle Scholar

  • Caselli, F., and D. Wilson. 2004. “Importing Technology.” Journal of Monetary Economics 51: 1–32.CrossrefGoogle Scholar

  • Caselli, F., and W. J. Coleman. 2006. “The World Technology Frontier.” American Economic Review 96 (3): 499–522.CrossrefGoogle Scholar

  • Chin, J. C., and J. M. Grossman. 1990. “Intellectual Property Rights and North-South Trade. In The Political Economy of International Trade: Essays in Honor of Robert E. Baldwin, edited by R. W. Jones and A. O. Krueger. Cambridge, MA: Basil Blackwell.Google Scholar

  • Chong, Y., O. Jordà, and A. M. Taylor. 2012. “The Harrod-Balassa-Samuelson Hypothesis: Real Exchange Rates and Their Long-Run Equilibrium.” International Economic Review 53 (2): 609–633.CrossrefGoogle Scholar

  • Coe, D. T., and E. Helpman. 1995. “International R&D Spillovers.” European Economic Review 39 (5): 859–897.CrossrefGoogle Scholar

  • Coe, D. T., E. Helpman, and A. Hoffmaister. 1997. “North-South R&D Spillovers.” Economic Journal 107 (440): 134–149.CrossrefGoogle Scholar

  • Commission on Intellectual Property Rights. 2002. “Integrating Intellectual Property Rights and Development Policy.” London, September (available at: http://www.iprcommission.org/papers/pdfs/final_report/CIPRfullfinal.pdf).

  • Datta, A., and H. Mohtadi. 2006. “Endogenous Imitation and Technology Absorption in a Model of North-South Trade.” International Economic Journal 20 (4): 431–459.CrossrefGoogle Scholar

  • De Gregorio, J., and H. C. Wolf. 1994. “Terms of Trade, Productivity, and the Real Exchange Rate.”.NBER working paper 4807 National Bureau of Economic Research, Cambridge, MA.Google Scholar

  • Dicken, P. 2015. Global Shift: Mapping the Changing Contours of the World Economy., 7th ed. London, UK: Sage Publications Ltd.Google Scholar

  • Dinopoulos, E., and P. Thompson. 2000. “Endogenous Growth in a Cross-Section of Countries.” Journal of International Economics 51: 335–362.CrossrefGoogle Scholar

  • Diwan, I., and D. Rodrik. 1991. “Patents, Appropriate Technology, and North-South Trade.” Journal of International Economics 30: 27–48.CrossrefGoogle Scholar

  • Dixit, A. K., and J. E. Stiglitz. 1977. “Monopolistic Competition and Optimum Product Diversity.” American Economic Review 67: 297–308.Google Scholar

  • Doremus, P. 1996. “The Externalization of Domestic Regulation: Intellectual Property Rights Reform in a Global Era.” Indiana Journal of Global Legal Studies 3 (2): Article 2.Google Scholar

  • Duffy, J., and C. Papageorgiou. 2000. “A Cross Country Empirical Investigation of the Aggregate Production Function Specification.” Journal of Economic Growth 5: 87–120.CrossrefGoogle Scholar

  • Eaton, J., and S. Kortum. 1999. “International Patenting and Technology Diffusion: Theory and Measurement.” International Economic Review 40 (3): 537–570.CrossrefGoogle Scholar

  • Eaton, J., and S. Kortum. 2001. “Trade in Capital Goods.” European Economic Review 45: 1195–1235.CrossrefGoogle Scholar

  • Egger, H., and U. Kreickemeier. 2009. “Firm Heterogeneity and the Labor Market Effects of Trade Liberalization.” International Economic Review 50: 187–216.CrossrefGoogle Scholar

  • Evans, P. 1996. “Using Cross-Country Variances to Evaluate Growth Theories.” Journal of Economic Dynamics & Control 20 (6–7): 1027–1049.CrossrefGoogle Scholar

  • Fadinger, H., and K. Mayr. 2014. “Skill-Biased Technological Change, Unemployment, and Brain Drain.” Journal of the European Economic Association 12 (2): 397–431.CrossrefGoogle Scholar

  • Falvey, R., N. Foster, and D. Greenaway. 2009. “Trade, Imitative Ability and Intellectual Property Rights.” Review World Economics 145 (3): 373–404.CrossrefGoogle Scholar

  • Feenstra, R. C., and G. H. Hanson. 1996. “Globalization, Outsourcing and Wage Inequality.” American Economic Review 86 (2): 240–245.Google Scholar

  • Galor, O., and A. Mountford. 2008. “Trading Population for Productivity.” Review of Economic Studies 75 (4): 1143–1179.CrossrefGoogle Scholar

  • Gancia, G., and A. Bonfiglioli. 2008. “North-South Trade and Directed Technical Change.” Journal of International Economics 76 (2): 276–295.CrossrefGoogle Scholar

  • Gancia, G., and F. Zilibotti. 2009. “Technological Change and the Wealth of Nations.” Annual Review of Economics 1 (1): 93–120.CrossrefGoogle Scholar

  • Gancia, G., A. Mller, and F. Zilibotti (2013). “Structural Development Accounting.” In Advances in Economics and Econometrics, Vol. 2, edited by Daron Acemoglu, Manuel Arellano, and Eddie Dekel, 373–418. Cambridge: Cambridge University Press.Google Scholar

  • Ghironi, F., and M. Melitz. 2005. “International Trade and Macroeconomic Dynamics with Heterogeneous Firms.” Quarterly Journal of Economics 120 (3): 865–915.Google Scholar

  • Glass, A., and K. Saggi. 2002. “Intellectual Property Rights and Foreign Direct Investment.” Journal of International Economics 56: 387–410.CrossrefGoogle Scholar

  • Grossman, G., and E. Helpman. 1990. “Comparative Advantage and Long Run Growth.” American Economic Review 80 (4): 796–815.Google Scholar

  • Grossman, G., and E. Helpman. 1991. Innovation and Growth in the Global Economy. Cambridge, MA: MIT Press.Google Scholar

  • Grossman, G., and E. Lai. 2004. “International Protection of Intellectual Property.” American Economic Review 94: 1635–1653.CrossrefGoogle Scholar

  • Hall, R. E., and C. I. Jones. 1999. “Why Do Some Countries Produce So Much More Output per Worker than Others?” Quarterly Journal of Economics 114 (1): 83–116.CrossrefGoogle Scholar

  • Hausmann, R., J. Hwang, and D. Rodrik. 2007. “It is Not How Much But What You Export that Matters.” Journal of Economic Growth 12: 1–25.CrossrefGoogle Scholar

  • Hwang, H., J. Z. Wu, and E. S. H. Yu. 2016. “Innovation, Imitation and Intellectual Property Rights in Developing Countries.” Review of Development Economics 20: 138–151.CrossrefGoogle Scholar

  • Helpman, E. 1993. “Innovation, Imitation and Intellectual Property Rights.” Econometrica 61 (6): 1247–1280.CrossrefGoogle Scholar

  • Helpman, E., and A. Hoffmaister. 1997. “North-South R&D Spillovers.” Economic Journal 107 (440): 134–149.Google Scholar

  • Helpman, E., O. Itskhoki, and S. Redding. 2010. “Inequality and Unemployment in a Global Economy.” Econometrica 78 (4): 1239–1283.CrossrefGoogle Scholar

  • Hummels, D., and A. Skiba. 2004. “Shipping the Good Apples Out? An Empirical Confirmation of the Alchian-Allen Conjecture.” Journal of Political Economy 102: 1384–1402.CrossrefGoogle Scholar

  • Ivus, O. 2011. “Trade-Related Intellectual Property Rights: Industry Variation and Technology Diffusion.” Canadian Journal of Economics 44 (1): 201–226.CrossrefGoogle Scholar

  • Jaumotte, F., S. Lall, and C. Papageorgiou. 2013. “Rising Income Inequality: Technology, or Trade and Financial Globalization?” IMF Economic Review 61 (2): 271–309.CrossrefGoogle Scholar

  • Jones, C. I. 1995a. “R&D Based Models of Economic Growth.” Journal of Political Economy 103 (4): 759–784.CrossrefGoogle Scholar

  • Jones, C. I. 1995b. “Time Series Tests of Endogenous Growth Models.” Quarterly Journal of Economics 110 (2): 495–525.CrossrefGoogle Scholar

  • Jones, C. I. 1999. “Growth: With or Without Scale Effects?” American Economic Review 89 (2): 139–144.CrossrefGoogle Scholar

  • Juhn, C., K. Murphy, and B. Pierce. 1993. “Wage Inequality and the Rise in Returns to Skill.” Journal of Political Economy 101 (3): 410–442.CrossrefGoogle Scholar

  • Katz, L., and K. Murphy. 1992. “Changes in Relative Wages, 1963–1987: Supply and Demand Factors.” Quarterly Journal of Economics 107 (1): 35–78.CrossrefGoogle Scholar

  • Krueger, A., and L. Summers. 1987. “Efficiency Wages and the Inter-industry Wage Structure.” Econometrica 56: 259–293.CrossrefGoogle Scholar

  • Krugman, P. 2008. “Trade and Wages, Reconsidered.” Brookings Papers on Economic Activity, Spring. 103–154.CrossrefGoogle Scholar

  • Lai, E. 1998. “International Intellectual Property Rights Protection and the Rate of Product Innovation.” Journal of Development Economics 55: 115–130.CrossrefGoogle Scholar

  • Leamer, E. 1996. “Wage Inequality from International Competition and Technological Change: Theory and Country Experience.” American Economic Review 86 (2): 309–314.Google Scholar

  • Lothian, R., and M. P. Taylor. 2008. “Real Exchange Rates over the Past Two Centuries: How Important is the Harrod-Balassa-Samuelson Effect?” Economic Journal 118 (532): 1742–1763.CrossrefGoogle Scholar

  • MacDonald, R., and L. A. Ricci. 2007. “Real Exchange Rates, Imperfect Substitutability, and Imperfect Competition.” Journal of Macroeconomics 29 (4): 639–664.CrossrefGoogle Scholar

  • Manova, K., and Z. Zhang. 2012. “Export Prices Across Firms and Destinations.” Quarterly Journal of Economics 127 (1): 379–436.CrossrefGoogle Scholar

  • Mansfield, E., M. Swartz, and S. Wagner. 1981. “Imitation Costs and Patents: An Empirical Study.” Economic Journal 91 (364): 907–918.CrossrefGoogle Scholar

  • Matsuyama, K. 2007. “Beyond Icebergs: Towards a Theory of Biased Globalization.” Review of Economic Studies 74: 237–253.CrossrefGoogle Scholar

  • Nelson, R., and E. S. Phelps. 1966. “Investment in Humans, Technological Diffusion, and Economic Growth.” American Economic Review 56: 69–75.Google Scholar

  • Papageorgiou, C. 2002. “Technology Adoption, Human Capital, and Growth Theory.” Review of Development Economics 6: 351–368.CrossrefGoogle Scholar

  • Parello, C. P. 2008. “A North-South Model of Intellectual Property Rights Protection and Skill Accumulation.” Journal of Development Economics 85: 253–281.CrossrefGoogle Scholar

  • Quah, D. 1997. “Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs.” Journal of Economic Growth 2 (1): 27–59.CrossrefGoogle Scholar

  • Robertson, R. 2004. “Relative Prices and Wage Inequality: Evidence from Mexico.” Journal of International Economics 64: 387–409.CrossrefGoogle Scholar

  • Romer, P. 1990. “Endogenous Technological Change.” Journal of Political Economy 98 (5): S71–S102.CrossrefGoogle Scholar

  • Sá, N., M. Connolly, and P. Peretto. 2009. “Sustaining the Goose that Lays the Golden Egg: A Continuous Treatment of Technological Transfer.” Scottish Journal of Political Economy 56 (4): 492–507.CrossrefGoogle Scholar

  • Samuelson, P. 1964. “Theoretical Notes on Trade Problems.” Review of Economics and Statistics 46 (2): 145–154.CrossrefGoogle Scholar

  • Segestrom, P. 1998. “Endogenous Growth Without Scale Effects.” American Economic Review 88: 1290–1310.Google Scholar

  • Sener, F., and L. Zhao. 2009. “Globalization, R&D and the iPod Cycle.” Journal of International Economics 77: 101–108.CrossrefGoogle Scholar

  • Summers, R., and A. Heston. 1991. “The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950–1988.” Quarterly Journal of Economics 106 (2): 327–368.Google Scholar

  • Teece, D. J. 1977. “Technology Transfer by Multinational Firms: The Resource Cost of Transferring Technological Know-How.” Economic Journal 87 (346): 242–261.CrossrefGoogle Scholar

  • Vandenbussche, J., P. Aghion, and C. Meghir. 2006. “Growth, Distance to Frontier and Composition of Human Capital.” Journal of Economic Growth 11: 97–127.CrossrefGoogle Scholar

  • Verhoogen, E. 2008. “Trade, Quality Upgrading, and Wage Inequality in the Mexican Manufacturing Sector.” Quarterly Journal of Economics 123 (2): 489–530.CrossrefGoogle Scholar

  • Wood, A. 1998. “Globalisation and the Rise in Labour Market Inequalities.” Economic Journal 108 (450): 1463–1482.CrossrefGoogle Scholar

  • World Trade Organization (WTO). 1994. “Agreement on Trade-Related Aspects of Intellectual Property Rights: The TRIPS Agreement is Annex 1C of the Marrakesh Agreement Establishing the WTO.” Signed in Marrakesh, Morocco on 15 April 1994.Google Scholar

  • World Trade Organization. 2013a. World Trade Report Available online at (accessed in March 2014): https://www.wto.org/english/res_e/booksp_e/anrep_e/anrep13_e.pdf.

  • World Trade Organization. 2013b. International Trade Statistics Available online at (accessed in March 2014): https://www.wto.org/english/res_e/statis_e/its2013_e/its13_toc_e.htm.

  • World Trade Organization. 2014a. World Trade Report Available online at (accessed in January 2014): https://www.wto.org/english/res_e/booksp_e/anrep_e/anrep14_e.pdf.

  • World Trade Organization. 2014b. International Trade Statistics Available online at (accessed in January 2014): https://www.wto.org/english/res_e/statis_e/its2014_e/its14_toc_e.htm.

  • World Trade Organization. 2015a. World Trade Report Available online at (accessed in September 2015): https://www.wto.org/english/res_e/booksp_e/anrep_e/anrep15_e.pdf.

  • World Trade Organization. 2015b. International Trade Statistics Available online at (accessed in September 2015): https://www.wto.org/english/res_e/statis_e/its2015_e/its15_toc_e.htm.

  • Wu, H. 2010. “Distance to Frontier, Intellectual Property Rights, and Economic Growth.” Economics of Innovation and New Technology 19 (2): 165–183.Google Scholar

  • Yang, G., and K. Maskus. 2001. “Intellectual Property Rights, Licensing, and Innovation in an Endogenous Product-Cycle Model.” Journal of International Economics 53: 169–187.CrossrefGoogle Scholar

  • Young, A. 1991. “Learning-by-Doing and the Dynamic Effects of International Trade.” Quarterly Journal of Economics 101: 396–405.Google Scholar

  • Zeugner, S. 2013. “Tradable vs. Non-tradable: An Empirical Approach to the Classification of Setors.” European Commission October 2013. Available online at (accessed in January 2014): http://www.zeugner.eu/studies/research/TradedShares_zeugner.pdf.

  • Zhu, S. C., and D. Trefler. 2005. “Trade and Inequality in Developing Countries: A General Equilibrium Analysis.” Journal of International Economics 65: 21–48.CrossrefGoogle Scholar

About the article

Published Online: 2017-08-24


Citation Information: The B.E. Journal of Macroeconomics, 20170070, ISSN (Online) 1935-1690, DOI: https://doi.org/10.1515/bejm-2017-0070.

Export Citation

©2017 Walter de Gruyter GmbH, Berlin/Boston. Copyright Clearance Center

Comments (0)

Please log in or register to comment.
Log in