Macroeconomic E¤ects of Intellectual Property Rights: A Survey

This paper provides a survey on studies that analyze the macro-economic e¤ects of intellectual property rights (IPR). The \u85rst part of this paper introduces di¤erent patent-policy instruments and reviews their e¤ects on R&D and economic growth. This part also discusses the distortionary e¤ects and distributional consequences of IPR protection as well as empirical evidence on the e¤ects of patent rights. Then, the second part considers the international aspects of IPR protection. In summary, this survey draws the following conclusions from the litera-ture. Firstly, di¤erent patent-policy instruments have di¤erent e¤ects on R&D and growth. Secondly, there is empirical evidence supporting a positive relationship between IPR protection and innovation, but the evidence is stronger for developed countries than for developing coun-tries. Thirdly, the optimal level of IPR protection should tradeo ¤ the social bene\u85ts of enhanced innovation against the social costs of mul-tiple distortions and income inequality. Finally, in an open economy, achieving the globally optimal level of protection requires an interna-tional coordination (rather than the harmonization) of IPR protection