The document discusses the relationship between property rights and economic growth. It begins by defining property rights as a bundle of rights including the right to use, earn income from, transfer, and enforce rights to a good. The document then reviews several studies that have examined the impacts of property rights. Some studies found a positive relationship between stronger property rights and economic growth in developed countries and regions like the EU. However, other studies found either no relationship or a negative relationship in developing regions like sub-Saharan Africa. The timing and initial strength of property rights may impact their effects. The document raises questions about related policies and ends with a bibliography.

1. PROPERTY RIGHTS AND ECONOMIC
GROWTH
THE RELATIONSHIP BETWEEN
INTERNATIONAL DEVELOPMENT & RESOURCES SS17
PREPARED BY WILLIAM KRATZER & JUNIOR TONETT
18 APRIL 2017

2. AGENDA
1. What are property rights?
2. Positive Impacts
3. Negative Impacts
4. Combined Study
5. Questions
6. Discussion

3. PROPERTY RIGHTS ARE A BUNDLE OF RIGHTS:
University of Illinois
THE RELATIONSHIP BETWEEN PROPERTY RIGHTS AND ECONOMIC GROWTH
1 the right to use the good
2 the right to earn income from
the good
3 the right to transfer the good to others
4 the right to enforce property rights
1 / 8

4. THE RELATIONSHIP BETWEEN PROPERTY RIGHTS AND ECONOMIC GROWTH
EMPIRICAL LINK BETWEEN PROPERTY RIGHTS & ECONOMIC GROWTH
▸ An increase in property rights leads to an increase in economic growth
▸ Many studies on this topic. Example: 2007-2014 Danube study found a
positive affect of Property Rights Alliance Organization index on economic
growth
▸ The study examined OCED countries and EU countries
2 / 8
Source: Haydaroglu, C. (2015). The relationship between property rights and economic growth: An analysis of OECD
and EU countries. DANUBE: Law and Economics Review, 6(4), 217–239. https://doi.org/10.1515/danb-2015-0014

5. THE RELATIONSHIP BETWEEN PROPERTY RIGHTS AND ECONOMIC GROWTH
THE POSITIVE IMPACT OF PROPERTY RIGHTS
▸ Firms will engage in innovation
activities when they feel their
investment is secure
▸ Incentive for firms to act “long-term”
▸ Incentive to move from informal to
formal market
3 / 8

6. THE RELATIONSHIP BETWEEN PROPERTY RIGHTS AND ECONOMIC GROWTH
SUB-SAHARAN AFRICA - A DIFFERING EMPIRICAL STUDY
▸ An increase in property rights leads to an decrease in economic growth
▸ 1985-2003 study found a negative affect of Ginarte Park index on economic
growth
▸ The study examined sub-Saharan countries (34 total)
4 / 8
Source: Adams, S. (2011). Intellectual Property Rights, Innovation, and Economic Growth in Sub – Saharan Africa.
Journal of Third World Studies, 28(1).

7. THE RELATIONSHIP BETWEEN PROPERTY RIGHTS AND ECONOMIC GROWTH
THE NEGATIVE IMPACT OF PROPERTY RIGHTS
▸ Foreign firms extract payments from
developing countries
▸ drive out competition
▸ Domestic firms in developing countries lack
foundation to innovate
▸ “learning through imitation”
5 / 8

8. SHENZHEN
‣ Described as a center for
“copy-cat” production
‣ Historically has had a very
weak IPR regime
‣ Emerging as a hub for
manufacturing innovation
THE RELATIONSHIP BETWEEN PROPERTY RIGHTS AND ECONOMIC GROWTH
6 / 8
Source: Welcome to Silicon Delta. (2017). Retrieved April 17, 2017, from
https://www.economist.com/news/special-report/21720076-copycats-are-
out-innovators-are-shenzhen-hothouse-innovation

9. THE RELATIONSHIP BETWEEN PROPERTY RIGHTS AND ECONOMIC GROWTH
THE TIMING OF PROPERTY RIGHTS IS IMPORTANT
▸ “Does the impact of IPR on innovation vary by state of economic development,
and do stronger IPR stimulate innovation?”
▸ 1980-2009 study of 62 developing and developed countries
▸ Starting amount of IPR (Ginarte & Park Index) and per capita GDP have a
significant impact on the effectiveness of IPR on innovation (# of US patents, US
excluded).
7 / 8
Source: Hudson, J., & Minea, A. (2013). Innovation, Intellectual Property Rights, and Economic Development: A
Unified Empirical Investigation. World Development, 46, 66–78. https://doi.org/10.1016/j.worlddev.2013.01.023

10. THE RELATIONSHIP BETWEEN PROPERTY RIGHTS AND ECONOMIC GROWTH
NEGATIVE & POSITIVE IMPACTS OF PROPERTY RIGHTS
▸ Mid-level IPR is always ineffective and will have
negative impact on innovation
▸ Stronger IPR is not always better for in-country
innovation
▸ Stronger IPR in developed countries has a
positive effect on innovation
▸ IPR policy needs to be dynamic
8 / 8

12. SHOULD THE GOV’T ADOPT A POLICY OF SUPPORTING
“COPY-CAT” INDUSTRIES OR RELY ON FDI TO PROVIDE
TECHNOLOGY TRANSFER?
Discussion Question
THE RELATIONSHIP BETWEEN PROPERTY RIGHTS AND ECONOMIC GROWTH

13. IT HAS BEEN SUGGESTED THAT DEVELOPED
COUNTRIES SHOULD INVEST IN R&D AT DEVELOPING
ONES TO COMPENSATE FOR STRONG IPR. WOULD
THIS BE EFFECTIVE? ARE THERE OTHER “FAIR”
SOLUTIONS?
Discussion Question
THE RELATIONSHIP BETWEEN PROPERTY RIGHTS AND ECONOMIC GROWTH

16. THE RELATIONSHIP BETWEEN PROPERTY RIGHTS AND ECONOMIC GROWTH
BIBLIOGRAPHY
▸ Adams, S. (2011). Intellectual Property Rights, Innovation, and Economic Growth in Sub –
Saharan Africa. Journal of Third World Studies, 28(1).
▸ Haydaroglu, C. (2015). The relationship between property rights and economic growth: An
analysis of OECD and EU countries. DANUBE: Law and Economics Review, 6(4), 217–239.
https://doi.org/10.1515/danb-2015-0014
▸ Hudson, J., & Minea, A. (2013). Innovation, Intellectual Property Rights, and Economic
Development: A Unified Empirical Investigation. World Development, 46, 66–78. https://
doi.org/10.1016/j.worlddev.2013.01.023
▸ Welcome to Silicon Delta. (2017). Retrieved April 17, 2017, from https://www.economist.com/
news/special-report/21720076-copycats-are-out-innovators-are-shenzhen-hothouse-innovation