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Institute for International Economic Studies, Stockholm University Seminar Papers, Institute for International Economic Studies, Stockholm University

No 720:
Globalization, Divergence and Stagnation

Gino Gancia

Abstract: In a world where poor countries provide weak protection for intellectual property rights, market integration will systematically shift technical change in favor of rich nations. For this reason, free trade can increase international income differences. At the same time, integration with countries where intellectual property rights are weakly protected can have a large adverse effect on the world growth rate. These results provide a strong rationale for global regulations, critical in a system of interdependent economies for sustaining innovation and reducing income inequality. Supportive empirical evidence is presented.

Keywords: Economic Growth; North-South Trade; Intellectual Property Rights; Cross-Country Income Differences; Innovation Diversion; (follow links to similar papers)

JEL-Codes: F14; F43; O33; O34; O41; (follow links to similar papers)

37 pages, June 13, 2003

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