Economic development Essay

Smith (2002) follows the question structure in 1990 hardly if narrows down the inquiry range from nation- clear aim data to industry- take aim data. This newsprint provides further abstract from 1972 to 1992 at five-year intervals and foc holds on three specific spare-sensitive industries Biological products, Medicinal and Botanicals, and Pharmaceuticals. The results in the paper support the hypothesis of the previous studies in 1999. Moreover, one of the in the main differences mingled with this paper and the previous studies, as mentioned above, is the stripe of visible rights world index finger.The level of bare rights security department varies from countries to countries. In practice, there are both methods to measure the apparent(a) rights index Rapp-Rozek index and Ginarte-Park index. Maskus and Penubartis research (1995) and Smith (1999 & 2001) every(prenominal) adopt Rapp and Rozek index but this paper measures tangible rights index by Ginarte-Park ind ex. In fact, both indubitable rights indices have been used in many trial-and-error literatures active patent rights.The Rapp and Rozek index will be careful by six features coverage of inventions, examination procedures, and term of protection, transferability of rights, compulsory licensing, and potent enforcement against infringement (Smith, P. J. 1999). On the side, the scores of Ginarte and Park index will be determined by five features membership in international treaties, coverage, and restrictions on patent rights, enforcement and duration of protection. The sum score is zero through five.The high(prenominal) total points indicate stronger patent protection (Park, W. G. , 2008). Smiths determination verifies that there is no signifi understructuret difference between using two patent rights indices. Notwithstanding, comparing with Rapp and Rozek index, Ginarte-Park index which merger the important international patent laws and agreement into the evaluation is used in this paper. Rafiquzzaman (2002) examines the amount of export of Canada to 76 countries in 1990 according to 22 categories in 2-digit level of the Standard industrial Classification (SIC) Codes.The explanatory variables are gross national income, population size, patent rights, tariff rate and distance. It is worth noting that Rafiquzzaman compare the results of two different index of patent right as well and then find the coefficient of correlation between Rapp-Rozex index for 1984 and Ginarte-Park index for 1990 is 0. 78. In other words, using both Rapp-Rozex index or Ginarte-Park index to estimate countrys patent protection has no signifi undersidet difference, as Smiths finding. The polish of this study provides support for verifying Smiths hypothesis in 1999.That is to say, an increase in patent rights often leads in an increase in Canadas exports, in particular if importing countries have high frugal suppuration levels and strong flagellums to imitation. After reviewi ng the theoretical research and existing experiential literatures, the effect of patent rights competencyiness be positive or negative, compensate be ambiguous. It might depend on some characteristics of importing countries countrys economic developments levels, strength of patent rights and local imitation pressure, for example.This paper attempts to extend Smiths research in 1999 but use different database. Besides, this paper adopts up-to-date data (2005) to examine the relationship between the strength of patent right and international trade which does the result as the same as Smiths research in 1999, 2001, and 2002. This research structure can help governments have an overall picture to tumble the relationship between economic growth and the strength of patent rights. As discussed above, effects of patent rights are defined in early empirical studies are commercialise expansion and market power.In principle, market power and expansion effects can be briefly explained in two aspects have and supply in economics. The market expansion effect can be defined that market shares of patent holders will rise when the patent rights protection in importing countries is improved. The advanced rights of patent generate high prices of imitation to competitors and encourage, promote and attract more(prenominal) than foreign engine room to importing countries. In other words, little imitation not only implies an increased demand for exports because of get down costs, but also infers an increased supply.It is because exporters compose anti-imitative costs such as monitor costs, enforcement costs and costs to baffle copying and imitation. In a standard demand and supply model, cost reduction leads a right shift both in demand and supply line. On the other hand, improved patent rights protection might produce monopolistic market power and contribute to a more concentrated market because of higher technical and cost barriers to entry. From the standard mon opoly model, it can be seen that the sold quantity of monopolistic enterprises would be always less than the society optimum quantity in wander to sell products at prices plus monopoly mark up.There is a monopolistic tactics to increase firms profit is to beat selling quantity down in order to raise price. Hence, market power effect will confer more market power on the patent holders and then result in a reduction of the amount of export. In this article, we collect data sets from US exports and study three forms of bilateral trade equations to test three hypotheses about the relationship between exports and patent rights in relation to income development, imitative abilities, and threat of imitation, respectively.The first hypothesis which examines the relation between patent rights and country development is based on Maskus and Penubartis research (1995) and Smiths research (1999). The other two hypotheses are based on Smiths research (1999) to take the degree of threat of imita tion and imitative abilities into account. surmisal 1- interaction between exports and patent rights with relation to countrys level of development In this section, I suppose a countrys development of patent rights positively respond to its economic development.We assume that countries with higher economic development would pay more attention on patent reform. In addition, higher-income veritable countries possess much financial resources than lower-income countries. As imagined, higher-income developed nations are likely to control up great majority pulmonary tuberculosis and performance on research and development in the world. Otherwise, developing countries take ambiguous attitudes towards the worlds patent reform. As discussed above, a maddened debate originates in some doubts with regard to effects of patent protection from developing countries.A patent reform in developing countries might attract foreign investment and international trade, but it might take into custody economic development in local industry as well. Besides, lower income economies seem to relatively lack non natural resources such as financial and technological resources. It is said that higher income countries possess some degree of market power because of these unique competitive advantages such as patent, financial resources or higher technical capacities. Hence, referring to above assumptions, higher income developed nations pose stronger patent protection than lower income countries have.