Intellectual Property and Foreign Direct Investment: An Empirical Analysis

Authors

  • Nur Hayati Abd Rahman Faculty of Business and Management, Universiti Teknologi MARA Melaka
  • Khairunnisa Abd Samad Faculty of Business and Management, Universiti Teknologi MARA Melaka
  • Shahreena Daud Faculty of Business and Management, Universiti Teknologi MARA Melaka
  • Zarinah Abu Yazid Faculty of Business and Management, Universiti Teknologi MARA Melaka

DOI:

https://doi.org/10.24191/ji.v14i2.214

Keywords:

ASEAN-5, foreign direct investment, intellectual property protection, digital economy, copyrights

Abstract

With help from both domestic and international markets, ASEAN countries are able to catch-up withthe latest economic development if they can sustain high economic growth for a long-period of time. To doso, the resources available in countries such as capital and labors should fully be utilized up to theoptimum level. The capital itself can be in many forms such as investment. Since most of the ASEANcountries are categorized as developing countries, the reliance on foreign direct investment (FDI) as asource of growth is highly needed as it helps the economy to step on a higher stage of economic developmentvia the roles of foreign experts and technological transfer. In ensuring a higher level of investment, there isa need to ensure a high level of intellectual property protection since it assists in promoting invention,innovation and new business development. In opposite, lacking in protection might discourage foreigninvestors to invest in the countries, thus limiting the ability of the countries to grow further. Therefore, theaim of this paper is to examine whether strong intellectual property protection will really help in attractingmore foreign investors to invest in ASEAN-5 countries. Using annual data from 2007 to 2016, panel dataestimation using random effect is employed. It was found that the ASEAN-5 countries should strengthentheir intellectual property protection in order to stimulate higher foreign investments. Nevertheless, inbetween copyright and patents, copyrights protection gives significant effect to the FDI inflows relative tothe latter one. It indicates that the countries are slowly moving out from the production-based economy andcatching-up towards a digital economy. Keywords: ASEAN-5, foreign direct investment, intellectual property protection, digital economy, copyrights

References

ASEAN (2015). ASEAN economic community blueprint 2025. Jakarta: ASEAN Secretariat.
Bellos, S. & Subasat, T. (2012). Governance and foreign direct investment: A panel gravity model approach. International Review of Applied Economics, 26 (3), 303-328.
Cook, T.R. & Liu, A.H. (2015). Using linguistic networks to explain strength of intellectual property rights. World Development, 87, 128-138.
Dunning, J.H. (1993). Multinational enterprises and the global economy. Addison-Wesley Publishing Company, Wokingham, England.
Elshamy, H.M. (2015). The economic determinants of Chinese foreign direct investment in Egypt. Journal of Chinese Economic and Foreign Trade Studies 8 (1), 20-26.
Ghazal, R. & Zulkhibri, M. (2015). Determinants of innovation outputs in developing countries: Evidence from panel data negative binomial approach. Journal of Economic Studies 42 (2), 237-260.
Hsu, J. & Tiao, Y.E. (2015). Patent rights protection and foreign direct investment in Asian countries. Economic Modelling 44, 1-6.
Ivus, O., Park, W. & Saggi, K. (2015) Intellectual property protection and the industrial composition of multinational activity. Vanderbilt University Department of Economics Working Papers 15-00012.
Javorcik, B.S. (2004). The composition of foreign direct investment and protection of intellectual property rights: Evidence from transition economies. European Economic Review 48, 39-62.
Jorgenson, D.W. & Vu, K.M. (2016). The ICT revolution, world economic growth and policy issues. Telecommunications Policy, 40 (5), 383-397.
Mohamed Nour, S. S. O. (2015). Overview of knowledge economy in the Arab region. Journal of Knowledge Economy 6, 870–904.
Ni, B., Spatareanu, M., Manole, V., Otsuki, T. & Yamada, H. (2017). The origin of FDI and domestic firms’ productivity: Evidence from Vietnam. Journal of Asian Economics, 52, 56-76.
Tomohara, A. (2016). Japan’s tourism-led foreign direct investment inflows: An empirical study. Economic Modelling, 52, 435-441.
Yoo, D. & Reimann, F. (2017). Internalization of developing country firms into developed countries: The role of host country knowledge-based assets and IPR protection in FDI location choice. Journal of International Management, 23 (3), 242-254.
Zhang, H. & Yang, X. (2016). Trade related aspects of intellectual property rights agreements and the upsurge in foreign direct investment in developing countries. Economic Analysis and Policy, 50, 91-99.

Downloads

Published

2019-11-29