Spillover Effect of International Trade and Intellectual Property Rights Protection

Spillover effect of international trade is a crucial source of new technology for the South. This paper considers the transfer of technology from the North to the South that occurs through trade in high-technology goods and explicitly models the "reversing-engineering" process that allow the South to assimilate new technology, which is effected by the southern Intellectual Property Rights(IPR) protection. It analyzes potential costs and benefits of stronger Intellectual Property Rights (IPR) protection in the terms of growth and spillover effect of international trade. A key finding is that the effect of IPR on economic growth in the South is decided by the relative technological level between the North and the South.