This paper analyzes the interactive effect of trade openness and intellectual property rights (IPR) on economic growth. Recent literature suggests that IPR may work through the mechanisms of trade and FDI to affect growth. An IPR interaction with openness may aid in detecting this effect. This paper also analyzes whether this effect varies depending on income level of the country. Building from Gould and Gruben (1996), this empirical analysis uses a panel regression with 62 countries in ten year periods from 1980 to 2010. The results suggest that: (1) the interaction between trade openness and IPR is important in understanding the effect of IPR on growth; (2) this interaction plays a significant role in understanding the “U-shaped” effect of IPR on economic growth for countries with different levels of income. These findings suggest that effects of trade and FDI are important considerations for understanding IPR and growth. It also suggests but that the level of development a country is in also matters significantly.
Bodine-Smith, Tyler, "Interactive Effects of Intellectual Property Rights and Trade Openness on Economic Growth" (2013). Undergraduate Honors Theses. 401.