Journal of Policy Modeling 30 (2008) 725–735

Available online at www.sciencedirect.com

Globalization and income inequality: Implications forintellectual property rights

Samuel Adams ∗Ghana Institute of Management and Public Administration, P.O. Box AH 50, Achimota, Accra, Ghana

Received 15 June 2007; received in revised form 17 September 2007; accepted 20 October 2007Available online 15 January 2008

Abstract

This paper examines the impact of globalization on income inequality for a cross-section of 62 developingcountries over a period of 17 years (1985–2001). The results of the study indicate that globalization explainsonly 15% of the variance in income inequality. More specifically, the results show that (1) strengtheningintellectual property rights and openness are positively correlated with income inequality; (2) foreign directinvestment is negative and significantly correlated with income inequality but this is not robust to differentmodel specifications; (3) the institutional infrastructure is negatively correlated with income inequality. Thestudy’s findings and the review of the literature suggest that globalization has both costs and benefits and thatthe opportunity for economic gains can be best realized within an environment that supports and promotessound and credible government institutions, education and technological development.© 2008 Society for Policy Modeling. Published by Elsevier Inc. All rights reserved.

JEL classification: FO2; I30; K19

Keywords: Globalization; Income inequality; Intellectual property rights; Developing countries

1. Introduction

The past two decades can be described as the era of globalization. Although there is no consen-sus on the definition of globalization, a common term that is synonymously with globalization isintegration, in terms of people, capital, ideas, technology, and services (Houck, 2005). Empirically,globalization translates into greater mobility of the factors of production (capital and labor) andgreater world integration through increased trade, foreign direct investment (FDI), and enforce-ment of intellectual property rights [IPR] (Milanovic, 2005; Wade, 2001). Though many studies

∗ Tel.: +233 285173307/209450202.E-mail address: sadamss2000@yahoo.com.

0161-8938/$ – see front matter © 2008 Society for Policy Modeling. Published by Elsevier Inc. All rights reserved.doi:10.1016/j.jpolmod.2007.10.005

726 S. Adams / Journal of Policy Modeling 30 (2008) 725–735

have been done to examine the effects of trade and FDI on both economic growth and incomeinequality, not much has been on the effect of IPR. In the era of globalization, almost everyone isa user and a potential creator of intellectual property and therefore its protection, which is calledintellectual property rights, should be of significance to policymakers.

The purpose of this paper is to examine the impact of globalization especially the harmoniza-tion of intellectual property rights (IPR) on income inequality. This is important because in thepast decade the protection of IPR has moved from an arcane area of legal analysis to the forefrontof global economic policymaking (Maskus, 2000a). This in no small measure has been motivatedby the successful completion of the World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) in 1994. The TRIPS agreement set strongminimum standards in each of the areas commonly associated with IPRs, including patents, copy-rights, trademarks, and trade secrets (Maskus, 2000b). To the knowledge of the authors, this is thefirst paper to empirically examine the impact of IPR on income inequality in developing countries.Further, we also control for regional groups to identify any differential effects of globalization(with a particular reference to IPR) in developing countries.

The rest of the paper is organized as follows: Section 2 offers a brief review of the literatureon globalization and income inequality. Section 3 describes the data and methodology used andSection 4 presents and analyzes the results. Section 5 presents the implications, directions forfuture research, and offers concluding remarks.

2. Literature review

Many explanations have been given as to how global integration should affect the distributionof income. For example, the neoclassical growth theory and the neoliberal paradigm, whichdominated public policy on issues of national development in the 1990s, suggest that integration into the world economy through trade and FDI should lead to reduction in the distribution of incomeacross nations (Heshmati, 2005; Wade, 2001). Thus, in the spirit of law of even development or themodernization perspective, countries are more likely to gain from integration into internationalmarkets relative to less integration. The modernization perspective suggests that continued growthexpand the middle class and increases employment and the savings rates among the poor, leading toreduction in income inequality (Beer, 1999). The implication is that developing economies wishingto catch up with the standards of living of the developed countries should open up their marketsby lowering tariffs, removing trade restrictions, granting privileges to FDI and enforcing IPR. Asnoted by Maskus (2000a) effective IPR regime has an effect not only on the incentive for newknowledge creation and its dissemination, but even more important, the market structure, prices,and distributional equity. Also, the CIPR (2002) report noted that in the poorest regions of theworld, strengthening IPR could help to stimulate invention and new technologies, thereby leadingto an increase in agricultural or industrial production in less developed countries that could havepositive effect on the distribution of income. A World Intellectual Property Organization [WIPO](2003) report noted that intangible assets – such as knowledge, creativity and inventiveness arerapidly replacing traditional and tangible assets – such as land labour and capital – as the drivingforces of economic development.

Contrary to the idea of convergence, anti-globalization advocates have long claimed that globalintegration is a cause of divergence rather than convergence of incomes between the world’seconomies. They suggest that the traditional causes of income inequality (e.g., land concentration,unequal access to education, and urban–rural gap) are unlikely to explain the rise the increasein income inequality in the past two decades. Such an increase, they argue is more likely to be

S. Adams / Journal of Policy Modeling 30 (2008) 725–735 727

related to the adoption of unfettered trade liberalization of domestic and international markets andthe shifts towards skill-intensive technologies all over the world (Giovanni, 1999). The idea ofdivergence is consistent with the endogenous growth theory, which predicts divergence in incomebetween nations because of the increasing returns to knowledge and technological innovation,which are more abundant in the developed countries.

Similarly, the dependency approach predicts that divergence is more likely from integrationbecause of the differential in benefits from economic integration for developed and developingcountries. Thus, national income inequality is in large part determined by growth potentials of pro-ductivities in the large global structure. For instance, Bornschier and Chase-Dunn (1985) claimedthat foreign investment creates an industrial structure in which monopoly is predominant, leadingto what they describe as underutilization of productive forces in the overall economy As a result,countries that are wholly dependent on foreign investment will experience stagnation, unemploy-ment, and increasing inequality. There are many studies like that of Bornschier and Chase-Dunn(1985), which indicate that FDI is the primary means through which the modern capitalist worldsystem creates and maintains intra and international socioeconomic inequities (Beer, 1999).

Given the conflicting theoretical views, many empirical studies have been conducted to examinethe impact of the globalization on income inequality for both developed and developing countrieswith a few focusing specifically on developing countries. Like the theoretical studies, however,the empirical studies have given inconsistent results. For example, while Milanovic (2002, 2005)and Barro (2000) find globalization to be proinequality, Ravallion (2001) and Dollar and Kraay(2002) find the effect of trade openness on income inequality to be insignificant. Milanovic (2005)studied 77 countries between 1988 and 1998 and found that globalization (trade share in GDP) hada negative effect on the distribution of income. However, the author reported that globalization’seffect was more severe for countries with GDP per capita income of less than $8000. Conversely,Dollar and Kraay used an unbalanced data of 92 countries over a period of 40 years (1960–1999)and found that that their openness measure was not significantly related to the income share ofthe lowest quintile.

Like the openness measure, results of studies on the FDI–income inequality relationship havebeen ambiguous. While Dixon and Boswell (1996a, 1996b) and Beer (1999) reported a positivecorrelation between FDI and income inequality, Sylwester (2005) reported otherwise. However,Tsai (1995) suggested that the typical positive finding between FDI and income inequality mightbe due to most of the studies not controlling for regional differences. To assess Tsai’s (1995)assertion that the positive correlation between FDI and income inequality may have emergedspuriously, Alderson and Nielsen (1999) used a large data set of 88 countries from 1967 to 1994.They found that controlling for the different geographical regions did not change the significantpositive effect of foreign capital penetration on income inequality. On the other hand, Sylwester(2005) in a study of 29 less developed countries from 1970 to 1989 reported that there is noevidence that FDI is associated with income inequality. Instead, the evidence though weak, pointsto a negative association between FDI and income inequality.

With respect to IPR, though there have been a lot of theoretical and empirical studies onthe impact of IPR on economic growth (Falvey, Foster, & Greenaway, 2006; Park & Ginarte,1997; Thompson & Rushing, 1996, 1999), almost all the studies on the IPR–income inequalityrelationship are theoretical in nature. Consequently, this study contributes to the literature onglobalization by examining empirically the effect of strengthening of IPR on income inequalityin developing countries. Nevertheless, the consensus of the studies so far indicate that the scope,depth, and enforcement of IPR are likely to differ across countries according to their economicand political institutions, and ability to engage in and disseminate the fruits of research and

728 S. Adams / Journal of Policy Modeling 30 (2008) 725–735

development (R&D) (La Croix & Konan, 2006). In light of these findings, CIPR (2002) assertthat developing countries are less likely to benefit from the harmonization of IPR, as the R&Dneeded to promote innovation is absent.

The review of the empirical literature indicates that the impact of the globalization variables onincome inequality is influenced by data heterogeneity, observed and unobserved country-specificeffects, and endogeneity issues. Accordingly, we control for these factors in our analysis of theimpact of globalization on income inequality for a panel data set of 62 developing countries overthe period 1985–2001. The data and empirical methodology used are described below.

3. Methodology and data

The empirical analysis is based on a panel data set consisting of four separate periods of 5-yearintervals between 1985 and 2001. In this study we employ a form of panel regression where weregress the dependent variable at a time T against the independent variables at a previous periodtime (T-1, T-2, or T-3) depending on the availability of Gini data. The independent variables aretaken for 1985, 1990, 1995, and 2000 and the dependent variable is taken for 1987, 1993, 1996, and2001. The use of lagged values helps to reduce any problems of reverse causality or endogeneityrelated to income inequality and the globalization variables. We use the 5-year intervals becausethe IPRs data is available for these periods. The equation we estimated is specified as follows:

Giniit = β0 + β1 FDIit + β2 OPENit + β3 POPit + β4 GOVit + β5 INSTit + β6 SECt

+ β7 IPRit + β8 LGCAPit + β9 LGCAPSQit + μi + εit

where Gini (a measure of income inequality) is the variable to be explained for a country i at a timet; foreign direct investment (FDI), integration in to the world economy (OPEN), and intellectualproperty rights (IPR) are the globalization variables; POP represents population and GOV isgovernment consumption; INST is a proxy for a country’s overall institutional or governanceinfrastructure; SEC represents human capital; LGDCAP controls for the level of developmentand LGCAPSQ is the square of LGCAP; �is are the coefficients to be estimated; μi represents thecountry-specific effect which is assumed to be time invariant, and �it is the classical disturbanceerror term.

We estimate a system of four equations using the seemingly unrelated regressions (SUR)method. The SUR estimation allows for different error variances in each equation and for correla-tion of these errors across equations (Makki & Somwaru, 2004). To eliminate any country-specificeffects or unobserved heterogeneity we first-differenced the data. To further eliminate or reduceheteroscedasticity problems we used SUR with cross-section weights.

The Gini index is measured as the Gini coefficient multiplied by 100. The Gini coefficientis a ratio with values between 0 and 1, with 0 representing perfect income equality and 1 beingperfect inequality. Thus, higher values of the index indicate increasing inequality and lower valuesexplain otherwise. The income inequality data is obtained from Chen, Datt, and Ravallion (2004)POVCAL software, which is maintained on the World Bank’s website. LGCAPSQ is an additionalvariable that is included in the income inequality regressions as the level of development andincome inequality is hypothesized to exhibit a curvilinear relationship (Ahluwalia, 1976; Kuznets,1955; Lee, 2006; Sylwester, 2005; Tsai, 1995); Income inequality is therefore expected to increaseinitially but over time, continual growth will lead to a reduction in income inequality. We thereforeexpect LGCAP and LGCAPSQ to be positively and negatively correlated with income inequality,respectively.

S. Adams / Journal of Policy Modeling 30 (2008) 725–735 729

Table 1Descriptive statistics

INEQ IPR FDI OPEN

Mean 45.85 2.27 1.97 61.96Maximum 66.70 4.04 16.17 231Minimum 28.41 0.00 −5.21 0.929S.D. 9.24 0.80 2.58 36.13

The globalization literature suggests that openness promotes growth; however, it also increasesincome disparities between countries. Consequently we expect the openness measure (trade sharein GDP) to exert a positive effect on economic growth and a negative effect on the distributionof income. From the perspective of the globalization advocates, FDI may play a significant rolein generating positive spillover effects in terms of new technologies and management skills thatcontribute to growth (Sylwester, 2005). However, the modernization and dependency theories,suggest that FDI may have negative effect on the distribution of income and consequently weexpect FDI to be positively correlated with income inequality. IPR is expected to have positiveeffect consumer welfare and overall social progress especially in highly innovative countries withactive R&D. However, R&D is nearly absent in most developing countries and therefore we expectIPR to have a negative effect on the distribution of income.

The data on SEC and FDI come from the World Development Indicators CD-ROM (2006),and are measured as the gross secondary school enrollment and net FDI inflows share in GDP,respectively. The strength of intellectual property rights protection (IPR) is measured by theGinarte–Park index of patent rights, which is based on five categories of patent laws: (1) extent ofcoverage; (2) membership in international patent agreements; (3) provisions for loss of protection;(4) enforcement mechanism; and (5) duration of protection. Each of these categories (per country,per time period) is scored a value ranging from 0 to 1, and the outweighed sum of these five valuesconstitutes the overall value of the patent rights index. The index therefore ranges from 0 to 5,with higher numbers indicating stronger protection.

Data on OPEN (trade share in GDP) and the level of development (GDP per capita) wereobtained from the Global Development Network Growth Database (2007) and data on the gov-ernment consumption and gross fixed investment were obtained from the World DevelopmentIndicators CD-ROM (2006). The institutional variable is a composite measure of the investmentclimate, which is obtained from the Political Risk Services’ Country Risk Guide (2006). It ismade up of three measures: political, financial, and economic risk and it includes factors likelaw and order, government stability, bureaucratic quality and corruption. It is rated on a scale ofzero to 100, with zero meaning highest risk and 100 referring to the lowest risk. We expect anegative effect of INST on income inequality as good governance would ensure that rent seek-ing by privileged groups is avoided or at the least reduced and also ensures that governmentbureaucracies concentrate on enhancing the opportunities and possibilities of the poor (Lopez,2003). The descriptive statistics is presented in Table 1 and the list of countries is presented in theAppendix A.

4. Results and discussion

The regression results are reported in Table 2. Column 1 shows that the globalization variablesexplain about 15% of the variance in income inequality. The results show that strengthening IPRs

730S.A

dams

/JournalofPolicyM

odeling30

(2008)725–735

Table 2Regression coefficients for the impact of globalization on income inequality

1 2 3 4 5 6

OPEN 0.005** (0.002) 0.017*** (0.004) 0.009*** (0.004) 0.011** (0.005) 0.005 (0.006) 0.010* (0.005)IPR 1.137*** (0.255) 1.177*** (0.327) 1.155*** (0.363) 1.227*** (0.379) 1.155*** (0.363) 2.045*** (0.399)FDI −0.009 (0.021) −0.115** (0.047) −0.051 (0.067) −0.054 (0.071) −0.051 (0.067) −0.059* (0.047)LGCAP 0.804 (1.302) 4.632*** (1.180) 5.156*** (1.392) 2.717** (1.112) 1.713 (0.927)GOV −0.047** (0.021) 0.019 (0.046) 0.002 (0.042) 0.017 (0.043) −0.049* (0.027)INST −0. 040** (0. 017) −0. 043*** (0. 014) −0. 039*** (0. 014) −0. 038*** (0. 012) −0. 036* (0. 017)POP −0.000** (0.000) −0.000*** (0.000) −0.000*** (0.000) −0.000*** (0.000) −0.000** (0.000)SEC −0.012 (0.021) −0.013 (0.022) −0.000 (0.020)LGCAPSQ −25.315 (22.197)ASIA 1.274*** (0.409)LA 0.920 (0.734)SSA 0.557 (0.601)IPR*AS 0.006 (0.004)IPR*LA −0.505 (0.709)IPR*SSA −2.568 (0.622)

Constant −0.120*** (0.028) 0.229* (0.120) 0.314*** (0.084) 0.350*** (0.081) −0.416 (0.622) 0.129 (0.091)

N 175 155 136 136 136 155

R2 adjusted 0.15 .18 0.47 0.60 .49 .28

Note. t-statistics in parentheses.* Significant at the 10% level.

** Significant at the 5% level.*** Significant at the 1% level.

S. Adams / Journal of Policy Modeling 30 (2008) 725–735 731

has a significant positive effect on income inequality in almost all the model specifications. Thisfinding is consistent with the assertion that not only do developing countries not benefit fromstrengthening the IPR system, but that they may be worse off with the benefit accruing to moredeveloped or innovating countries. Furthermore, it is possible that some corporations will focustheir resources on defending their original innovations rather than developing new products andtherefore limiting their output below socially desirable levels leading to negative consequenceson consumer welfare (Shapiro & Hassett, 2005). Controlling for regional differences does notchange the coefficient on the IPR variable (Column 4). Further, the cross product of the IPR andregional dummies show that none of the interaction terms is significantly correlated with incomeinequality (Column 6), which indicates that strengthening IPR does not exert different effects indeveloping countries. OPEN is also positive and significantly correlated with income inequality,suggesting that increased integration into the world economy negatively affects the distributionof income in developing countries.

FDI, however, is negative and in a few cases even significantly related to income inequality. Theimplication is that increased flow of FDI may have a positive effect on the distribution of incomein developing countries. It is important to note, however, that many studies have suggested thatFDI has been more productive in Asia than in other regions of the world (Agosin & Mayer, 2000;Fry, 1993), which suggests that FDI’s effect may be sensitive to regional differences. As noted inColumn 5, when the regional groups are controlled for, the FDI variable is no longer significantsupporting the assertion of Tsai (1995) that FDI’s effect on income inequality is sensitive to thetype of countries included in the study.

The LGCAP and its power term (LGCAPSQ) have the correct signs but the LGCAPSQ is notsignificant and therefore we do not find support for a curvilinear relationship between the level ofdevelopment and income inequality for the sample of countries over the study period (Column 4).With respect to the other explanatory or control variables, the institutional, population, govern-ment consumption, and human capital variables are negatively correlated with income inequality,while the level of development is positively correlated with income inequality. The effect of theinstitutional variable is one of the most robust findings to different model specifications, whichsuggests that the country conditions in particular, may be more important in influencing the dis-tribution of income than any domestic or international policy per se. Though the human capitalvariable is never significantly related to income inequality, it is important to note, however, thatwhen it is included in the regression, the explanatory power of the model improves significantlyas seen in the increase of the adjusted coefficient of determination from less than 0.20 (Columns1 and 2) to a high figure of 0.60 (Columns 5). This result might mean that though human capital isan important element in reducing income inequality; most of the countries of the study’s samplehave not reached the minimum threshold of skill needed to positively affect the distribution ofincome.

5. Policy implications and concluding remarks

The impact of globalization on income inequality has been generally examined in the literaturewith only a few focusing specifically on developing countries. Further, many of these studies havefocused on two main channels of globalization, including trade and FDI. This paper contributesto the literature by examining a third and important component of the globalization process—theprotection of intellectual property rights.

The results of the study show that trade liberalization and strengthening of IPR have a negativeeffect on the distribution of income, while FDI‘s effect on income inequality is sensitive to the type

732 S. Adams / Journal of Policy Modeling 30 (2008) 725–735

Table 3IPR and Gini values in the 1990s

Region IPR Gini

SSA 2.66 46.9LA 2.36 49.3AS 2.11 35

Source: Authors calculation based on Ginarte and Park (1997) and Deninger and Squire (1996).

of countries included in the study’s sample. Even more important, the study finds that the overallcountry conditions in terms of the institutional infrastructure and skill level are key determinantsof income inequality. These results have policy implications.

First, it is important to note that though Latin American and African countries, for example,are known to have more open economies and higher IPR protection compared to Asian countries,the level of income inequality is lowest in Asia (Table 3).

Further, Asian countries have been more proactive in making use of TRIPS flexibilities(UNCTAD, 2007). India, for example, has taken WTO flexibilities concerning IPR rules to refusepatents on existing medicines. Indeed, India recently won a case against Novartis, that filed a law-suit against India challenging the constitutionality of Section 3(d) of the provision of Indian PatentLaw that states that patent monopolies will be awarded for only “truly innovative medicines” ratherthan minor changes of existing medicines (Odell, 2007).

Similarly, Thailand has established a program to help it provide cheap medicines to peoplewith AIDS by issuing compulsory licenses on several patented medicines to ensure that theyare available at more affordable prices than they would otherwise be (Action for Global Health,2007). The WIPO (2003) report indicated that Singapore and Korea have also adopted a proactiveapproach to patent policy such that it promoted patent licensing, joint ventures, and strategicalliances to encourage local inventions as well as foreign direct investment. Indeed, The WTO’sDoha Declaration in 2001 accepts government’s rights to use compulsory licensing as a meansto facilitate access to cheaper medicines through import or local production (Commission onIntellectual Property Rights, 2006).

Second, though IPR protection has been recognized as part of the infrastructure supportinginvestments in R&D leading to innovation and subsequent economic development (Kanwar, 2006;World Bank, 2005, and World Intellectual Property Organization (WIPO), 2003), it is also knownthat strengthening IPR has costs (Horii & Iwaisako, 2007; Maskus, 2000a). Even more criticalis the argument that the current global IPR system favors the holders of intellectual property,which invariably happens to be the developed countries over the users of intellectual propertythat are mostly the LDCs. This is not surprising as the number of global patents originating inthe 50 countries identified by the UN as LDCs has dropped from an average of 66 per year in theearly 1990s to just 10 per year between 2000 and 2004 (UNCTAD, 2007). Incidentally, the USnet surplus of royalties and fees increased from $14 billion in 1991 to $22 billion in 2001, whiledeveloping countries suffered a deficit of nearly $7.5 billion in 1999 alone. The discussion aboveis consistent with the assertion of Helpman (1993) that if anyone benefits from patent protection,it is certainly not the South.

Third, the effectiveness of the IPRs system is dependent on how it impacts on innovation, marketstructure, and technology transfer (Naghavi, 2005), and hence the need to enhance the skill levelor absorptive capacity of domestic firms in improving their productivity. This requires investmentin information and communications technology, and education and job training to enhance the

S. Adams / Journal of Policy Modeling 30 (2008) 725–735 733

entrepreneurial capability of both individuals and firms in the production of goods and servicesto partake fully in the benefits that globalization brings. Bernanke (2007), for example, has notedthat the greatest cause of inequality in the era of globalization can be attributed to the very highreturns to education and consequently, policies that maximize opportunities for education andjob training will help to reduce income inequality. Obviously, workers with more education andtraining will be better able to adapt to the fast paced changing demands in the workplace in the21st century.

Finally, globalization is not completely responsible for income inequality within and acrosscountries. As shown in Column 1, the study’s results show that the three-globalization variablesexplain only 15% of the variance in income inequality. This finding is consistent with the assertionof Stewart and Berry (2000) that though globalization might negatively affect the distribution ofincome, other country conditions, including labor laws, strength of unions and a variety of gov-ernment safety net provisions might modify or accentuate the impact of globalization on incomeinequality. Rather, the evidence suggests that countries that have grown rapidly and improvedtheir standard of living have not only opened up their economies for trade and FDI but have alsomaintained macroeconomic stability (Rodrik, 1999).

The challenge for developing countries is how to reform their IPRs regime to maximize theirgains, while limiting the potentially adverse effects of improved protection and to facilitate accessof local entrepreneurs to the IPR system as has been done in India, Thailand, and South Korea. Ithas also been argued the developed and those developing countries that have achieved substantialgrowth rates have all fine tuned their IPRs system to match their development needs, ratherthan blindly implementing a wholesale IPRs policy (CIPR, 2002; Dolfsma, 2006; Kumar, 2002;Maskus, 2000a). These studies suggest that there has generally been an association with weakrather than strong forms of patent protection in the formative period of economic developmentand the IPRs regimes strengthened as countries became significant producers of innovations andnew technology as seen in Korea and India.

In discussing the findings and implications of the study, it is worth mentioning the limitationsof the study. First, the time period is not long enough to make conclusive statements about theeffect of globalization on income inequality. Data constraints made that impossible. Second, thechanging macroeconomic and political events in the various developing countries suggest that wemight not be able to capture all the factors that might influence income inequality. The limitationsand the inconsistency of the other studies reviewed suggest that many more country-specificstudies are needed to validate the more global studies. Further, as more consistent data on incomeinequality becomes available for many developing countries, it will be possible to evaluate thelong-run effects of globalization on the distribution of income

We conclude by asserting that globalization is neither inherently good nor bad for developingcountries, as current debates seem to suggest. Instead, globalization has both costs and benefits.However, the opportunity for economic gains can be best realized within an environment thatsupports skilled resources, sound and credible government institutions, and technological devel-opment. Without these fundamentals, the pursuit of economic gains through trade liberalization,establishing incentives to attract FDI, and strengthening of IPR will not be achieved for develop-ing countries. Clearly, the literature reviewed and the findings of this study call for IPR regimesnorms to be fine-tuned to establish a balance between intellectual property protection and eco-nomic development of developing countries. Globalization, even though may be biased againstdeveloping countries, has created a situation in which countries with the appropriate policiesmight be able to succeed in bringing about economic development as is the case for most of theAsian economies.

734 S. Adams / Journal of Policy Modeling 30 (2008) 725–735

Appendix A

List of countries in study sample

Algeria Ecuador Malaysia SenegalArgentina Egypt Mali Sierra LeoneBangladesh El Salvador Mauritania South AfricaBolivia Ethiopia Mexico Sri LankaBotswana Ghana Morocco SwazilandBrazil Guatemala Mozambique TanzaniaBurkina Faso Guyana Nepal ThailandBurundi Honduras Nicaragua TunisiaCameroon India Niger UgandaCentral African Rep Indonesia Nigeria UruguayChile Iran Pakistan VenezuelaChina Jamaica Panama VietnamColombia Jordan Paraguay ZambiaCosta Rica Kenya Peru ZimbabweCote d’Ivoire Madgascar PhilippinesDom Rep Malawi Rwanda

References

Action for Global Health (2007). Health: EU opposes cheap anti-AIDS drugs in Thailand. http://www.globalhealthnetwork.eu/news/ (accessed 08/29/07).

Agosin, M., & Mayer, R. (2000). Foreign direct investment: Does it crowd in domestic investment? (United NationsConference on Trade and Development Working Paper No. 146). Geneva, Switzerland.

Ahluwalia, M. S. (1976). Inequality, poverty, and development. Journal of Development Economics, 3, 307–342.Alderson, S. A., & Nielsen, F. (1999). Income inequality, development, and dependence. American Sociological Review,

64, 617–628.Barro, R. (2000). Inequality and growth in a panel of countries. Journal of Economic Growth, 5, 5–32.Beer, L. (1999). Income inequality and transnational corporate penetration. Journal of World Systems Research, 5, 1–25.Bernanke, B. (2007). Inequality and globalization. Speech delivered before the Greater Omaha Chamber of Commerce.

February 6, 2007. CQ Transcripts Wire.Bornschier, V., & Chase-Dunn, C. (1985). Transnational corporations and development. New York: Praeger.Chen, S., Datt, G., & Ravallion, M. (2004). A program for Calculating Poverty Measures from Grouped Data.

http://iresearch.worldbank.org/PovcalNet/Introduction.html (accessed on 04/1/07).Commission on Intellectual Property Rights (2002). Integrating intellectual property rights and development policy.

London.Commission on Intellectual Property Rights (2006). Intellectual property right, innovation and pubic health.

www.who.int/intellectualproperty (accessed on 08/23/07).Deninger, K., & Squire, L. (1996). A new data set measuring income inequality. World Bank Economic Review, 10(3),

565–591.Dixon, W. J., & Boswell, T. (1996a). Dependency, articulation, and denominator effect: Another look at the foreign capital

penetration. American Journal of Sociology, 102, 543–562.Dixon, W. J., & Boswell, T. (1996b). Differential productivity, negative externalities, and foreign capital dependency:

Reply to Firebaugh. American Journal of Sociology, 102, 576–584.Dolfsma, W. (2006). IPRs, technological development, and economic development. Journal of Economic Issues, 40(2),

333–342.Dollar, D., & Kraay, A. (2002). Growth is good for the Poor. Journal of Economic Growth, 7, 195–225.Falvey, R., Foster, N., & Greenaway, D. (2006). Intellectual property rights and economic growth. Review of Development

Economics, 10, 700–719.Fry, M.J. (1993). Foreign direct investment in a macroeconomic framework: Finance, efficiency, incentives, and distortions

(Policy Research Working Papers No. 1141). Washington, DC. World Bank.Ginarte, J. C., & Park, W. (1997). Determinants of patent rights: A cross-national study. Research Policy, 26, 283–301.

S. Adams / Journal of Policy Modeling 30 (2008) 725–735 735

Giovanni, A.C. (1999). Liberalization, globalization, and income distribution (UNU-WIDER Working Paper No. 157).Helsinki.

Global Development Network Growth Database. http://www.nyu.edu/fas/institute/dri/database.html. Accessed on 4 Jan.2007.

Helpman, E. (1993). Innovation, imitation, and intellectual property rights. Econometrica, 61(6), 1247–1280.Heshmati, A. (2005). The relationship between inequality, poverty, and globalization (WIDER Research Paper No.

2005/37). Finland.Horii, R., & Iwaisako, T. (2007). Economic growth with imperfect protection of intellectual property rights. Journal of

Economics, 90, 45–85.Houck, M. (2005). Globalization and inequality. Maryland: St. Mary’s Project.Kanwar, S. (2006). Innovation and intellectual property rights (Center for Development Economics Working Paper No.

142). India: Delhi School of Economics.Kumar, N. (2002). Intellectual property rights, technology transfer, and economic development: Experiences of Asian

countries. Commission on intellectual property rights background paper 1b. London: Commission on intellectualproperty rights.

La Croix, S. J. L., & Konan, D. (2006). Have developing countries gained from the marriage between Trade Agreementsand Intellectual Property Rights? (University of Hawaii – Manoa Economics Working Paper No. 06-5).

Lopez, H. (2003). Macroeconomics and Inequality. The World Bank Research Workshop on Macroeconomic Challengesin low-income countries. Washington, DC: The World Bank.

Lee, J. (2006). Does globalization matter to income distribution in Asia? Journal of Policy Modeling, 28, 791–796.Kuznets, S. (1955). Economic Growth and Income Inequality. American Economic Review, 45, 1–28.Makki, S., & Somwaru, A. (2004). Impact of foreign direct investment and trade on economic growth: Evidence from

developing countries. American Journal of Agricultural Economics, 86, 795–801.Maskus, Keith E. (2000). Intellectual property rights and economic development. Case Western Journal of International

Law, 32, 471–506.Maskus, Keith. E. (2000b). Intellectual property rights in the global economy. Washington, DC: Institute of International

Economics.Milanovic, B. (2002). Can we discern the effect of income distribution? Evidence from household budget surveys (World

Bank Policy Research Working Paper 2876). Washington, DC: World Bank.Milanovic, B. (2005). Can we discern the effect of income distribution? Evidence From household budget surveys. World

Bank Economic Review, 19, 21–44.Naghavi, A. (2005). Strategic Intellectual Property Rights Policy and North–South Technology Transfer. NOTA DI

LAVORO 18.2005, Milano.Odell, M.A. (2007). A win for generic drugs: Indian court rules against drug maker Novartis. http://www.socialfunds.com.M. Park, W. & Ginarte, J. C. (1997). Intellectual property rights and Economic Growth. Contemporary Economic Policy,

15, 51–60.Political Risk Services’ Country Risk Guide (2006). http://www.prsgroup.com/CountryData.aspx. Accessed on May 2007.Ravallion, M. (2001). Inequality convergence. World Bank Policy Research Working Paper No. 2645. Washington, DC:

World Bank.Rodrik, D. (1999). Where Did All the growth go? External shocks, social conflict and growth collapses. Journal of

Economic Growth, 4, 385–412.Shapiro, R, & Hassett, K. (2005). The economic value of intellectual property. USA for Innovation. Washington, DC.Stewart, F., & Berry, A. (2000). Globalization, liberalization, and inequality: Real causes. Challenge, 43, 44–92.Sylwester, K. (2005). Foreign direct investment, growth, and income inequality in less developed countries. International

Review of Applied Economics, 19, 289–300.Thompson, M., & Rushing, F. (1996). An empirical analysis of the impact of patent protection on economic growth.

Journal of Economic Development, 21(2), 61–79.Thompson, M., & Rushing, F. (1999). An empirical analysis of the impact of patent protection of economic growth: An

extension. Journal of Economic development, 24, 67–76.Tsai, P. L. (1995). Foreign direct investment and income inequality: Further evidence. World Development, 23, 469–483.United Nations Commission on Trade on Development [UNCTAD], (2007). The Least Developed Countries Report:

Knowledge, technological learning and innovation for development.Wade, R. H. (2001). The rising inequality of world income distribution. Finance & Development, 38, pp. 37–36World Bank (2005). World Development Indicators, Washington, DC: World Bank.World Bank (2006), World Development Indicators. Washington, DC: World Bank.World Intellectual Property Organization [WIPO] (2003). Intellectual property—power tool for economic growth. Geneva.