Exploring the interaction between intellectual property rights, human capital and R%D expenditures: are there implications for developing countries?

An extensive literature studies the consequences of intellectual property rights (IPRs) for economies in various stages of development. Surprisingly, few studies or none at all focus on how IPRs determine the effects of human capital accumulation (via educational attainment) on research and development (R%D) expenditures. The authors propose a simple framework that is consistent with an intuitive stylised fact that appears in the data, namely that countries with poor intellectual-property protection may accumulate human capital without experiencing a corresponding increase in R%D as a share of national income. The model predicts that without minimum intellectual-property protection, additional education may result in more imitation rather than innovation. Additionally, the model implies that human capital and intellectual property rights are substitutable incentives for skilled labour to participate in R%D. The preponderance of the evidence suggests that interactions between human capital and IPRs determine global patterns of R%D, and intellectual property rights tend to raise the effect of educational attainment on the incidence of R%D.