INTELLECTUAL PROPERTY RIGHTS PROTECTION’S IMPACT ON FOREIGN DIRECT INVESTMENT

Abstract

This thesis evaluates the effect of intellectual property right (IPR) protection on foreign

direct investment (FDI) inflow for high-income, middle-income, and BRICS countries. Scholars debate over whether IPR protection’s impact on FDI inflow is positive or negative; this thesis finds that IPR protection’s impact depends on a country’s development stage and what the country’s comparative advantages are. Foreign investors invest in middle-income countries, including BRICS, to gain access to cheaper labors and to reduce their operational costs; in this case, strictly enforced IPR protection adds to the cost and makes the country less attractive as an investment destination. Economic well-being of a market is still a major determinant of a company’s investment decisions and IPR protection is not a priority in some cases.

This thesis argues that, in order to increase a country’s FDI volume, all policy makers

should focus on expanding the country’s economy and stabilizing its currencies. For middle income countries, infrastructure is also an attractive selling point for foreign investors.

This thesis can be improved by finding more accurate measurements for a country’s

technological advancements, its political stability, and whether if the country joined multi-lateral trade organizations such as the World Trade Organization.