Intellectual property rights are an important element of the new theories of endogenous growth. Because of their special relationship to human capital, intellectual property protection may influence innovative activity and technological progress in critical ways, An important question for many countries is whether stricter enforcement of inteliectual property is a good stratesl for economic growth. This paper exariines the role of intellectual property rights in economic growtl\ utilizing crosscountry data on patent protection, trade regime, and country-specific characteristics. The evidence suggests that intellectual property protection is positively related to economic growth. These effects appear to be slightly stronger in relatively open economies and are robust to both the measure of openness used and to other alternative model specifications.
Intellectual property rights are an important element of the new theories of endogenous growth. Because of their special relationship to human capital, intellectual property protection may influence innovative activity and technological progress in critical ways, An important question for many countries is whether stricter enforcement of inteliectual property is a good stratesl for economic growth.This paper exariines the role of intellectual property rights in economic growtl\ utilizing cross-country data on patent protection, trade regime, and country-specific characteristics. The evidence suggests that intellectual property protection is positively related to economic growth. These effects appear to be slightly stronger in relatively open economies and are robust to both the measure of openness used and to other alternative model specifications. 'We thank
Mexico's commercial banks had been nationalized in 1982 under the presidential administration of Jose Lopez Portillo. Under the administration of Miguel de la Madrid Hurtado (1982-8), so-called nonbank functions of the bank were allowed to be performed by private sector institutions. The 1991-92 privatizations of the Carlos Salinas de Gortari administration (1988-94) were part of a series of radical reforms in the financial services industry that actually began in 1987 during the de la Madrid Hurtado administration (1982-88). 2 At the time of the nationalization of the Mexican commercial banking system in 1982, there had been 60 Mexican banks, of which 58 were nationalized. In order to capture perceived economies of scale, Mexico reorganized the commercial banking industry-merging the 58 commercial state-owned banks into just 18. Although the industry had been consolidating prior to 1982 in any case, these new mergers represented a significant increase in industry concentration. Indeed, at the time of privatization, the three largest banks accounted for nearly three-fifths of total assets in the commercial banking system, while the three largest U.S. banking organizations at that time held about one-seventh of U.S. commercial bank assets. "Mr. Pereguna...suggests that after privatisation in 1991-92 most banks abandoned common sense in a race to sign up customers and expand their credit base." Financial Times, London Edition. October 15, 1996 A major theme in the literature of privatization is that the benefits are much abridged if a government monopoly is simply replaced by a private sector monopoly or oligopoly (Hanson, 1994). Variations on this theme surfaced in many discussions of Mexico's bank privatization of 1991-1992, in which controlling interests in Mexico's 18 government-owned commercial banks were sold to financial groups-chiefly organizations that already dominated the nation's securities industry. 1 A near-universal concern was that years might pass between when Mexico's banking system was privatized and when its performance might approach most standards of competitiveness. Although Mansell Carstens (1993) argued that privatization would raise some measures of efficiency, she also suggested that spreads between banks' cost of funds and interest rates on loans could remain high for years-in part because the high degree of oligopoly power in the provision of bank services would likely continue. 2 Bazdresch and Warneck (1994) developed similar themes and-consistent with other authors-viewed Mexico's high interest rate margins as indicative of anti-competitive market power. An important reason for many observers' pessimism about competition in Mexican banking was the market's heavy concentration. Gavito, Sánchez and Trigueros (1992) developed the anti-competitive implications of concentration in the Mexican commercial banking system while Gavito and Trigueros (1993) argued that "some additional measures would be useful to induce greater competition" in it.
Dynamic panel estimates show the negative relation between trade openness and inflation found by Romer (1993) but questioned by Terra (1998) became more robust in the 1990s, both among high income OECD and developing countries. Also during the 1990s, openness was associated with less variable inflation and had a stronger disinflation effect in economies with floating exchange rates.
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