Intellectual Property Rights, FDI, R&D and Economic Growth: A Cross-country Empirical Analysis

This paper aims to empirically examine how intellectual property rights (IPRs) protection, foreign direct investment (FDI) and research and development (R&D), along with other possible variables, may affect the economic growth of the host country. Using the panel data of 92 countries during 1970-2007, I conclude from the system generalised method of moments estimation that domestic investment share, FDI, R&D capacity, openness to trade, human capital and IPRs protection all have statistically significant and positive impacts on economic growth. A further investigation of countries at different levels of development suggests two striking findings. First, besides the domestic investment, openness, human capital and IPRs protection, R&D is the key to drive economic growth in the higher-income countries, while FDI is the engine of growth in both higher-income and middle-income countries. Second, a positive and significant impact of IPRs protection on economic growth is found in both higher-income and lower-income countries. However, such an impact is not detected in the middle-income countries.