Intellectual Property Rights and Innovation in Developing Countries: Evidence from Panel Data

The determinants of innovation and the role of intellectual property rights in different countries are not well understood. This paper estimates the determinants of innovation using a new panel dataset. It compares different panel estimation methods appropriate for finite size samples. Past R&D investments have a positive and significant impact on current innovation, while openness to trade has a negative and significant impact on innovation in developing countries and population size has a negative and significant impact on innovation in industrialized countries. Intellectual property protection is not significant for any of the groups. We discuss econometric issues and the policy implication of these results.