Intellectual Property Rights and Foreign Direct Investment

Adelaide to strengthen teaching and research in the field of international economics and closely related disciplines. Its specific objectives are: • to promote individual and group research by scholars within and outside the University of Adelaide • to strengthen undergraduate and postgraduate education in this field • to provide shorter training programs in Australia and elsewhere • to conduct seminars, workshops and conferences for academics and for the wider community • to publish and promote research results • to provide specialised consulting services • to improve public understanding of international economic issues, especially among policy makers and shapers Both theoretical and empirical, policy-oriented studies are emphasised, with a particular focus on developments within, or of relevance to, the Asia-Pacific region. Further details and a list of publications are available from: This paper reviews the theory and evidence on how intellectual property rights may influence decisions on FDI and technology transfers. The message is that, while there are indications that strengthening IPRs can be an effective incentive for inward FDI, it is only a component of a broader set of factors. Policy makers should recognize the complementarities among IPRs, market liberalization and deregulation, technology development policies, and competition regimes. These are complex issues, leading to complicated tradeoffs for market participants. Governments may wish to devote considerable attention and analysis to devising means for assuring their countries will achieve net gains from stronger IPRs and additional IPRs and licensing over time. The global system of intellectual property rights (IPRs) is changing profoundly. Many developing countries have undertaken significant strengthening of their IPRs regimes. Several regional trading arrangements now address questions of regulatory convergence, particularly in IPRs. Most significant is the introduction of the agreement on trade-related intellectual property rights, or TRIPs, within the World Trade Organization (WTO). Under TRIPs, WTO members must adopt and enforce strong and non-discriminatory minimum standards of protection for intellectual property. Many developed countries are extending strong protection to controversial areas, including biotechnology and electronic databases. The movement toward much stronger global IPRs is consistent with processes of economic globalization, or the successively closer integration of national and regional markets through the reduction of barriers to trade, investment, and technology flows. In this world, knowledge creation and its adaptation to product designs and production techniques are increasingly essential for competitiveness and growth. This situation takes on political importance because the international mobility of capital and technology have risen …