Sector-specific IPR protection to overcome technology-skill mismatch in South? A simple model

This paper develops a dynamic, two-sector, North-South model of growth and trade to analyze the interactions between intellectual property rights (IPR) and the direction of imitation. The North develops new technologies, while the South imitates them, and the paper investigates how sector-specific IPR in the South can change the ratio of low-skill to high-skill technologies adopted by the South in order to maximize its welfare. The paper shows that in autarky the optimal IPR policy that maximizes the welfare in the South requires that the high-skill intensive sector should receive stronger IPR protection. It also shows that under free-trade the IPR protection in the South's high-skill intensive sector should be even stronger. (C) 2016 Elsevier B.V. All rights reserved.