The effect of patent enforcement strength and FDI on economic growth

Constantinos Alexiou (Cranfield School of Management, Bedford, UK)
Joseph Nellis (Cranfield School of Management, Bedford, UK)
Nikolaos Papageorgiadis (University of Liverpool Management School, Liverpool, UK, and Uppsala University, Uppsala, Sweden)

Multinational Business Review

ISSN: 1525-383X

Publication date: 12 December 2016

Abstract

Purpose

This paper aims to study the effects of the strength of patent enforcement on economic growth following the signing of the agreement on Trade-Related Aspects of Intellectual Property Rights and the role of inward foreign direct investment (FDI) flows in mediating and enhancing this relationship.

Design/methodology/approach

Following a generalized method of moments methodology, use is made of a new longitudinal index measuring the strength of enforcement-related aspects of patent systems.

Findings

Stronger levels of patent enforcement have a significant positive effect on the economic growth of both developed and developing countries. Importantly, inward FDI flows have a mediating role in positively boosting this effect for all countries and particularly for developed countries.

Originality/value

This is the first empirical study of the role of the strength of patent enforcement (“law in action”) in stimulating economic growth, as previous empirical studies have focused on the effect of the strength of patent law protection (“law on the books”). The failure in the past to allow for “law in action” was mainly due to the lack of available data that could proxy for the strength of patent enforcement levels in a country. This study utilizes a newly published, longitudinal index that captures the strength of the enforcement-related aspects of patent systems.

Keywords

Citation

Alexiou, C., Nellis, J. and Papageorgiadis, N. (2016), "The effect of patent enforcement strength and FDI on economic growth", Multinational Business Review, Vol. 24 No. 4, pp. 334-353. https://doi.org/10.1108/MBR-07-2016-0024

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Publisher

:

Emerald Group Publishing Limited

Copyright © 2016, Emerald Group Publishing Limited

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