Human Capital Use, Innovation, Patent Protection, and Economic Growth in Multiple Regions
RIT Economics Department Working Paper No. 12-06
28 Pages Posted: 29 Jul 2012 Last revised: 31 Jul 2012
There are 2 versions of this paper
Human Capital Use, Innovation, Patent Protection, and Economic Growth in Multiple Regions
Human Capital Use, Innovation, Patent Protection, and Economic Growth in Multiple Regions
Date Written: July 20, 2012
Abstract
We provide what to the best of our knowledge is the first theoretical analysis of the total effects of human capital use, innovative activity, and patent protection, on economic growth in a model with many regions. In each region, consumers have constant relative risk aversion preferences, there is no human capital growth, and there are three kinds of manufacturing activities involving the production of blueprints for inputs or machines, the inputs or machines themselves, and a single final consumption good. Our analysis leads to four salient results. For any given region, we first describe the balanced growth path (BGP) equilibrium and show that the BGP growth rate depends negatively on the rate at which patents expire. Second, we characterize the transitional dynamics in our model. Third, we determine the value of the patent expiry rate that maximizes the equilibrium growth rate of a region. Finally, we show that a policy of offering perpetual patent protection does not necessarily maximize social welfare in a region.
Keywords: Dynamic, Human Capital, Innovation, Multi-Region Economy, Patent, Stochastic
JEL Classification: R11, O31, L52
Suggested Citation: Suggested Citation
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