The Endogeneity of Knowledge Creation and Emergence of National Intellectual Property Rights Regimes

B. Müller, and C. Thachenkary. Proceedings of the 7. Annual Hawaii International conference on Business (HICOB 2007), Honolulu, HI, USA , (2007)


In this paper we argue that the degree of internalization of knowledge creation could help determine the strength of a country's intellectual property rights regime (IPRR). We use the literature on economic growth and IPRR to model a four-stage evolutionary path of knowledge creation from exogenous to endogenous sources; that is, importing initially from foreign sources to ultimately generating domestically by firms in the public, semi-private, and private domains. As a nation becomes scientifically and technically more robust and innovative from within, the intrinsic motivation to strengthen its IPRR becomes stronger, leading to greater economic and social welfare. We use India as a case study to discuss our model. India recently passed legislation to make its IPRR comply with its WTO commitments. Using our model, we argue that the gradual emergence of a highly innovative pharmaceutical industry in India was a major indicator of India's evolution from a weak to strong enforcer of intellectual property rights. We conclude by pointing out the benefits of international trade and knowledge transfer for greater economic growth in the global economy.

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