Intellectual Property Rights, Internalization, and Technology Transfer

Abstract

Intellectual property protection affects the manner in which multinational enterprises facilitate technology transfer from the innovating North to the developing South. Firms with products that are complex or technologically sophisticated will tend to internalize production through foreign direct investment. Firms that face a lower risk of imitation, or are less technically advanced, will tend to license production to non-affiliated Southern firms. Changes in intellectual property protection affect the level and the composition of technology transfer, depending on the value of the firm's proprietary asset.

Keywords: multinational enterprise, licensing, intellectual property rights, technology transfer, foreign direct investment

JEL Classification: F23, L24, O34