Some Bad News Is Good News for Foreign Investors: The Case of Intellectual Property Rights Infringement in China |
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| Authors: | Icksoo Kim Eunsuk Hong Jong Kook Shin Laixiang Sun |
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| Affiliation: | 1. Korea Univeristy, Korea University Business School, Seoul, South Korea;2. SOAS, University of London, Department of Financial and Management Studies, London, United Kingdom;3. Newcastle University, Newcastle Univeristy Business School, Newcastle upon Tyne, United Kingdom;4. University of Maryland, Department of Geography, College Park, Maryland, United States |
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| Abstract: | Despite China's attractiveness to foreign investors, intellectual property rights (IPR) protection in China has not caught up with international standards. This research aims to quantify the relationships between IPR violations, government effectiveness, and foreign direct investment (FDI) inflows in the context of China. Our econometric modeling and estimation based on provincial level data over 2002‐2012 show that in an early development stage of law and regulatory enforcement, the bad news of a rising number of IPR dispute cases signals the good news of an improvement in law and regulatory enforcement, which encourages IPR owners to raise legal cases. By contrast, in the later development stage, when law and regulatory enforcement has become much more effective, the bad news of a rising number of IPR disputes manifests itself as very bad news. Furthermore, this study confirms that FDI inflows enhance IPR protection through improving government effectiveness, and government effectiveness is one of the key factors promoting FDIs. © 2016 Wiley Periodicals, Inc. |
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| Keywords: | Foreign Direct Investment Dual Track System of IPR Enforcement IPR infringement Local Protectionism Government Effectiveness |
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