Intellectual property rights and south-north formation of global innovation networks

With the rise of the knowledge economy, delivering sound innovation policies requires a thorough
understanding of how knowledge is produced and diffused. This paper takes a step to analyze a
new form of globalization, the so-called system of Global Innovation Networks (GINs), to shed light
on how the protection of intellectual property rights (IPRs) influences their creation and
development. We focus on the role of IPR protection in fostering international innovative activities
in emerging economies (South), such as China and India, and more generally, how IPRs affect the
development of GINs between newly industrialized countries and OECD countries. Using both
survey-based firm-level and country-level global data, we find IPRs to be an important determinant
of participation in GINS from a Southern perspective. We find IPR protection at home and its
harmonization across county pairs foster South-North formation of GINs. We also find that a
stringent regime in the destination country discourages foreign international innovative activities
that originate in NICs. Both levels of our analysis confirm the ICT industry, particularly the
hardware segment, to rely on IPRs when engaging in the international outsourcing and offshoring
of innovation or in patenting activities abroad.