Working Paper Series
How Private Property Protection Influences the Impact of Intellectual Property Rights on Economic Growth
Posted April 2014
Walter G. Park
Although policy makers typically assume a positive relationship between intellectual property rights (IPRs) and economic growth, the empirical evidence on the IPR-growth relationship is rather inconclusive (e.g. Andersen and Konzelmann, 2008). We conjecture in this paper that the weak IPR-growth evidence in previous studies may be due to a neglect of the role of finance markets and private property rights. Our conjecture is motivated by the recent law and finance literature. We test our conjecture with a cross-section of 98 countries and find that once we modify our measure of IPRs to take into account general property rights, there is stronger evidence for a positive relationship between IPRs and economic growth. Our findings not only help explain the IPR-innovation puzzle in Lerner (2009), among others, but also have significant theoretical as well as policy implications.