A dynamic modelling approach to North-South disparities in IPR protection

Abstract This article introduces a dynamic modelling approach to tackling North-South protection of intellectual property rights (IPRs) in a global general-equilibrium environment, where bidirectional R&D, region-specific needs, and creative destruction interact to give rise to an analytical challenge. A complicated dynamical system is solved numerically for policy experiments with the South strengthening IPRs to match the Northern standard. Surprisingly, the South can reap a net gain, but the North cannot, if the welfare metric takes into account each region’s dynamic transition to steady state. Yet, if the transition dynamics are ignored, such a North-South welfare scenario could be reversed. More surprisingly, the no-winner scenario may even emerge if innovation can cause creative destruction significantly. The article thus cautions against previous studies that neglect the general-equilibrium dynamics driven by the elements of bidirectional R&D, region-specific needs, and creative destruction.